June 22, 2024
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OIL & GAS

South Africa Signals Potential Reduction in Shell’s Oil Exploration Licenses

South Africa’s Mineral Resources and Energy Minister, Gwede Mantashe, hinted at the possibility of granting fewer oil exploration licenses to Shell following the supermajor’s decision to divest from its downstream business in the country.

Mantashe revealed this in an interview with Bloomberg published on Friday.

Shell recently announced its intention to divest from downstream operations in South Africa as part of an internal portfolio review.

The company holds a majority share in Shell Downstream SA (SDSA), which was established through a merger agreement with Thebe Investment Corporation a decade ago.

The partnership aimed to consolidate Shell’s marketing and refining business, with Thebe holding a 28% stake in the downstream business.

However, disagreements persist between Shell and Thebe Investments regarding the valuation of Thebe’s stake in the project, as reported by the Daily Maverick.

In response to queries from the Daily Maverick, Shell stated its decision to reshape the downstream portfolio and divest its shareholding in SDSA.

According to Shell’s statement, the move aligns with Shell’s focus on performance, discipline, and simplification, following a comprehensive review of its downstream and renewables businesses across all regions and markets.

Following this announcement, South Africa’s Energy Minister Gwede Mantashe told Bloomberg “They still want to stay upstream, so what we should be doing, we should be more reluctant to grant licenses and permits, at that level, to Shell.”

Shell has previously relinquished some licenses offshore South Africa due to regulatory uncertainty surrounding the draft Upstream Petroleum Resources Development Bill, which is yet to be finalized by the country.

Analysts speculate that offshore formations shared by South Africa and Namibia, the latest deepwater exploration hotspot, could harbor significant resource potential, further shaping the landscape of oil exploration in the region.

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