British energy company Shell has announced plans to sell its South African downstream business, including its network of approximately 580 fuel stations, to the Abu Dhabi National Oil Company (ADNOC) in a deal valued at around $1 billion.
The transaction, announced on Tuesday, forms part of Shell's strategy to streamline its global operations and focus on key markets.
In a statement, Shell confirmed that Shell South Africa Holdings had agreed to sell its equity interest in Shell Downstream South Africa to ADNOC. The deal is expected to be finalised in 2027, subject to regulatory approvals.
Despite the change in ownership, the Shell brand will continue to operate in South Africa through licensing agreements, allowing customers to retain access to Shell's range of premium fuels and lubricants.
ADNOC said the acquisition represents a significant step in expanding its international retail business and strengthening its presence on the African continent.
"The acquisition marks a major step towards our ambition to become a global mobility and convenience retailer, while advancing our fuel retail footprint in Africa," the company said.
Separately, Shell released a trading update indicating that its natural gas production declined sharply during the second quarter of the year.
The company said gas production for the April to June period fell to between 630,000 and 650,000 barrels of oil equivalent per day, compared with 909,000 barrels per day in the first quarter.
According to Shell, the decline was largely driven by disruptions to production in Qatar caused by the recent conflict in the Middle East.
The company said the reduction in output reflected the impact of the conflict on Qatari gas volumes after infrastructure at the Ras Laffan liquefied natural gas hub sustained significant damage during the fighting.
Despite the lower gas production, Shell said it expects earnings from oil and gas trading to be significantly higher than in the previous quarter, benefiting from increased market volatility linked to the regional conflict.
Investors responded positively to the updates, with Shell's share price rising by nearly three percent during morning trading in London.
Market analyst Dan Coatsworth, head of markets at AJ Bell, said investors appeared encouraged by stronger-than-expected performance in Shell's integrated gas business, while higher global oil prices also supported the company's shares.
Shell is expected to publish its full second-quarter financial results on 30 July.