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What Shell leaving South Africa means for its petrol stations

| Supplier news

By: Myles Illidge - MyBroadband

Liquid Fuels Wholesalers Association of South Africa CEO Peter Morgan says the public shouldn’t panic about potential job cuts or a lack of filling stations with Shell exiting the country.

In an interview with Cape Talk, Morgan said the company will likely follow the same route it has in other African nations by leaving a smaller sub-brand in the country, in which it will retain a share.

“Don’t panic. What Shell is saying is they’re not going to close down their retail network if they do what they did in the rest of Africa,” he said.

Therefore, jobs at its roughly 600 forecourts are not immediately at risk, and the sites aren’t likely to shut down entirely.

“They will go, but they will leave behind a smaller sub-brand called Viva. They will find an 80% partner and keep 20% of that. So they aren’t closing the service stations and going away,” said Morgan.

“This is a common pattern with all the oil majors throughout Africa.”

Reports that Shell wants to leave South Africa first surfaced in early May 2024, following a dispute between the company and its long-term BEE partner, Thebe Investment Corporation.

Thebe Investment Corporation holds a 28% share in Shell Downstream South Africa, and it claims that Shell delayed resolving its dispute to orchestrate its exit from the country.

The disagreement originates from 2022 when Thebe wrote to Shell, expressing its desire to implement its “opt-out” clause and cash out to reinvest the funds in growing the company.

It submitted a stake valuation based on figures Shell had provided and valued its stake at $200 million (R3.7 billion).

Shell delayed responding to the submission for eight months. When it finally did, it reportedly backtracked on its figures and said Thebe Investment Corporation’s stake was worthless.

Thebe shareholders called the situation “The Great Dutch Heist” and said they felt “robbed and used”.

Shell Downstream South Africa declined to comment on the situation.

“As a matter of policy and principle, Shell Downstream SA distances itself from speculation or rumours, particularly in relation to confidential shareholder agreements and relationships,” it said.

“Out of respect for our partners and these agreements, we’re unable to provide any further comment currently.”

The oil giant confirmed its intentions to exit shareholdings in its South African retail, transport, and refining operations on Monday, following a worldwide review of its downstream and renewables business.

The international oil giant has a large presence in South Africa and has been operating there since 1902. The Department of Mineral Resources and Energy had also granted it exploration rights in the country.

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