Mantashe wants to ‘punish’ Shell over South Africa exit.

Mantashe wants to ‘punish’ Shell over South Africa exit. Image via: Flickr.

Mantashe seeks retribution against Shell for departure from South Africa

South Africa’s energy ministry may limit Shell’s oil exploration permits because Shell plans to leave the fuel-supply sector.

Mantashe wants to ‘punish’ Shell over South Africa exit.

Mantashe wants to ‘punish’ Shell over South Africa exit. Image via: Flickr.

The energy ministry of South Africa suggested that it might decrease the number of oil exploration permits given to Shell Plc due to the company’s intention to leave the fuel-supply industry in the country.

Mantashe to punish Shell

The oil giant is divesting its ownership in Shell Downstream South Africa, which encompasses 600 gas stations nationwide, to evaluate its operations in various regions and markets. 

Mineral Resources and Energy Minister Gwede Mantashe has indicated his intention to meet with Shell representatives to address the issue.

“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,” Mantashe said in an interview Thursday on the sidelines of an election campaign event in Richards Bay.

According to BusinessTech, Shell’s oil exploration endeavours in South Africa have encountered numerous obstacles, prompting the company to surrender licenses due to legislation uncertainty.

Despite years of deliberation, the Upstream Petroleum Resources Development Bill still needs to be completed in the country. 

 Furthermore, environmental organisations have impeded hydrocarbon exploration in South African waters through legal challenges.

Shell has contemplated exiting a substantial portion of South Africa’s fuel supply sector since at least 2021. Alongside BP Plc, they initiated an assessment of the potential sale of their Sapref refinery, which boasted a capacity of 180,000 barrels per day, making it the largest crude-processing facility in the nation.

Subsequently, the refinery was shut down the following year, prompting the government to explore the possibility of assuming control over it.

In response to a request for comment, the company stated via email that it would strive to maintain the Shell-branded service stations under new ownership through a brand licensing agreement. 

 However, it refrained from commenting on the minister’s statements.

Mantashe suggested geopolitical factors may be at play in the exit of western companies. The minister cited South Africa’s successful lawsuit against Israel’s war on Hamas at the International Court of Justice earlier this year, which “doesn’t make the European Union happy with us,” he said.

“The terms of engagement with Shell will be based on our national interests,” Mantashe said.

Shell affirms interest from multiple parties for South African retail business

On Tuesday, Shell PLC announced that it has been contacted by “several highly reputable parties” expressing interest in its retail business in South Africa.

On Monday, the oil major headquartered in London disclosed its intention to sell Shell Downstream South Africa (Pty) Ltd, which manages more than 600 service stations.

Thebe Investment Corp holds a 28% stake in Shell Downstream South Africa, while Shell retains ownership of the remaining shares.

According to Morning Star, the oil giant stated that withdrawing from South Africa aligns with its strategy to “reshape” its downstream portfolio.

On Tuesday, Shell Downstream South Africa informed Alliance News that it intends to maintain the Shell-branded service stations under new ownership through a brand licensing agreement.

Read more: Shell to exit South Africa: Departure plans revealed