Shell in $1 billion talks to sell South African fuel outlets to UAE’s ADNOC

Shell Plc is in advanced talks to sell its South African retail fuel network to Abu Dhabi National Oil Company (ADNOC) in a deal valued at $1 billion, as the British energy major continues a broader effort to streamline its global portfolio and exit selected downstream businesses.

ADNOC has emerged as the preferred bidder after negotiations between Shell and commodity trader Gunvor Group collapsed, with a potential agreement expected as early as this quarter. The proposed transaction involves about 600 retail fuel outlets across South Africa, a move that would give ADNOC roughly 10 percent of the market in Africa’s largest economy. 

The discussions come at a time of heightened volatility in global energy markets following the Middle East conflict, which has also prompted Shell to trim its first-quarter gas production outlook. Despite the uncertain environment, the sale process—launched in 2024—has advanced, underscoring ADNOC’s push to deepen its footprint across the African continent.

A century-long presence ends with divestment

Shell’s potential exit marks a significant shift for a company that has operated in South Africa for more than a century. Late in 2024, the company disclosed plans to divest its downstream operations in the region, part of a wider strategy to dispose of non-core assets globally.

Several parties had previously expressed interest in the South African assets, including Trafigura’s Puma Energy, Sasol Ltd., and state-owned PetroSA, though they are no longer part of the process, people familiar with the discussions said.

For ADNOC, the deal aligns with broader ambitions to expand beyond its traditional Middle East base. Before the Iran war, the Abu Dhabi state oil company accounted for roughly 4 percent of global oil output. It has also outlined plans to invest $150 billion between 2026 and 2030 to support growth and help meet global energy demand.

The company has already taken steps to increase its presence across Africa and the Middle East. In April, ADNOC agreed to invest $500 million alongside BP Plc to develop a gas field in Egypt. It has also been expanding its retail operations in that country, signaling a steady push into fuel distribution markets beyond its home region.

South Africa’s fuel sector consolidates

South Africa’s retail fuel sector has undergone significant consolidation in recent years. In 2018, Glencore Plc acquired Chevron Corp.’s Caltex-branded service stations, reshaping the competitive landscape. Recently, Vitol’s Vivo Energy completed the acquisition of Engen, the country’s largest fuel-station chain, tightening competition among global and regional players.

If completed, the $1 billion transaction would mark one of ADNOC’s most notable moves in Africa’s downstream market and highlight Shell’s continued focus on reshaping its portfolio. For both companies, the outcome reflects shifting priorities in an energy industry navigating geopolitical tension, evolving demand, and a renewed focus on scale in key markets.