British energy giant Shell announced Tuesday a deal to sell its South African downstream business, including 580 fuel stations, to the Abu Dhabi National Oil Company (ADNOC).
Shell said the sale, valued at about $1 billion, formed part of its strategy to focus on “key markets”, as the company separately flagged a big drop in second-quarter gas production because of the US-Iran war.
ADNOC said the “acquisition marks a major step towards” its “ambition to become a global mobility and convenience retailer, while advancing its fuel retail footprint in Africa”.
“Shell South Africa Holdings… has agreed to sell its equity interest in Shell Downstream South Africa” to ADNOC, the British group said in a statement.
“The transaction is expected to be completed in 2027, subject to regulatory approvals,” it added.
Shell said the company brand would remain in South Africa through licensing agreements, while customers would still have access to Shell’s premium fuels and lubricants.
In a separate update, Shell said its gas production had slumped in the April-June period, to a maximum 650,000 barrels of oil equivalent daily from 909,000 barrels per day in the first quarter.
Shell said the drop “reflects the impact of the Middle East conflict on Qatari volumes”.
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Shell’s gas production was impacted after the world’s largest liquefied natural gas hub, Ras Laffan in northern Qatar, suffered significant damage in the war.
Following the updates, Shell’s share price rose nearly three percent in London morning deals.
“There was a sense of relief at Shell after it said second quarter integrated gas production would be better than previously expected,” noted Dan Coatsworth, head of markets at AJ Bell, adding that the company was boosted additionally by oil prices rising Tuesday.
Shell noted also that its gains from oil and gas trading “is expected to be significantly higher” in the second quarter compared with the first, as the company benefited from volatile markets caused by the Middle East conflict.
Shell publishes its full quarterly results on July 30.
AFP