SHELL DOWNSTREAM SOUTH AFRICA: Powering Progress Through Sustainability Strategy  

In 2024, Shell South Africa announced that it would divest from its downstream business in the country after a review of operations across all regions. Shell Downstream SA (SDSA) was formed as a result of the merging of Shell South Africa Marketing and Shell South Refining businesses alongside Thebe Investment Corporation. For more than a decade, SDSA has built a comprehensive and successful business that strengthens the group and significantly contributes to South Africa. For this reason, SDSA Country Chair Aluwani Meseisi is certain that any new owner will acquire a brilliant set of assets that can continue without upheaval.

“It was a portfolio decision taken at group level. If we look at a number of markets, we have assets that the group has decided to divest from and South Africa’s downstream business was a part of that,” he tells Enterprise Africa. “We did this very differently as we went out and told everyone we were going through a divestment process – usually you would divest and then announce after. We are still involved in the process and our view is that we are divesting a going concern, with employees, capabilities, technologies, brand equity, and brand value in the market.” 

The brand, he says, holds a special place in South Africa, operating for more than 120 years, and any divestment is unlikely to result in job losses with preferred new owners likely being in-country businesses. 

“The capabilities and the assets of the business are core to what we deliver today and so we cannot foresee anyone taking away those capabilities after buying the business. Those capabilities drive our retail, depot, and terminal footprint, and the people that we have there are very talented and can run the business into the future. Our retailers are very important and are, in a sense, co-investors that drive what we are able to achieve as a business,” Meseisi explains of the future, mindful of the fact that the industry has, is, and will continue to change at significant speed. 

Today, Shell boasts more than 550 service stations across South Africa, and is active in multiple markets with a broad range of energy and fuel products that support economic growth and opportunity. Longer-term, the company is committed to a reduction in emissions and is rolling out a sustainability strategy that will result in ongoing investment during the divestment period. 

“We are taking the view that we want to run the business as a going concern through the divestment,” Meseisi confirms. “We are not making decisions differently from any other time. We will invest in the retail network where it makes sense – we are not shifting or changing anything. Since expansion aligns with our strategy, we are growing the network. Last year, we added more sites on a dealer-owned platform and this year we will look at what make sense too. Our retail network is located in the key economic hubs of the country and that is a great advantage that we have.” 

INCREMENTAL PROGRESS  

Globally, Shell has a long-term strategy to become a net-zero emissions business by 2050. CEO Wael Sawan told shareholders in 2023 that the company was continuing to create value with less emissions, and in South Africa there has been strong progress as the business follows suit.

Meseisi highlights the ongoing innovation in fuel development as key progress. He says that the company is looking at biodiesel for certain market segments. SDSA has introduced a number of new products that are more efficient and less emission heavy. A tank of Shell FuelSave diesel can take cars around 15 km further than before, emitting less CO₂ at the same time. “It is not something that is seen as important, but it is very important and is progressive.”

Across sites, the initiation of solar power projects has helped the company to reduce its reliance on the national power provider and is helping to reduce emissions. A partnership with a long-standing solar specialist (which Shell eventually acquired) has been key in rolling out solar and battery energy, especially at the Alberton depot where Shell stores and handles petrol, diesel, and other additives.

“We are making a lot of efforts around decarbonising our own operations. Last year, we installed a solar system at Alberton, lowering our emissions and becoming more sustainable in terms of the energy we need to operate,” says Meseisi. “In terms of company-owned retail sites, around 30% now have solar systems and that is something we are proud of and keen to continue rolling out. It’s about making sure that you don’t lose focus and you continue to provide energy while becoming sustainable and maintaining affordability across the board.”

The system at Alberton is a 352 kW solar PV project, generating about 640 MWh/y, and a 250 kVA battery, with 570 KWh storage. That battery provides about 150 MWh/y of throughput, of which 30 MWh is owing to grid arbitrage. The result is a reduction of Scope 2 greenhouse-gas emissions of the depot by 41%–around 556 tonnes per year of carbon emissions

Across the sub-Saharan Africa market, Shell is busy pushing more sustainable fuels that are backed by scientific research. Especially important in this rollout is partnerships with large fleets through which Shell believes it can have a big impact, especially considering the size of its retail reach and the many benefits it brings for regular customers.  

NATION BUILDING

The Shell brand in South Africa is extremely well-positioned thanks to a long history of quality performance on the road, in the boardroom, and in the community. The company has long been a strong contributor to social upliftment through various long-standing programmes that have helped it to share success beyond its own operations. For Meseisi, this is a source of pride and will continue into the future. 

“We do a lot of work in nation building. South Africa, with the history it has, does have high levels of inequality. As a company, we are very proud to do what we can in different layers to ensure we contribute to building a more united nation and a more equal society,” he says adding that the company is now 72% African with almost 50% of employees female, 48.4% of senior and board positions female, and 84% black employees.

The company runs a number of programmes in the community that address many challenges from energy provision to education to business acceleration. Access to Energy, a programme in KwaZulu-Natal, has provided 375 households with solar systems that deliver energy to a community that was previously unconnected. At a cost of R20 million, Access to Energy has had a significant impact on the lives of people.

“I visited some recipients of power in the area and some of the people have lived in the area for 50 years without access to electricity, but when they switched the lights on it was like the start of a new life. They can now buy perishable food because they can power a refrigerator. School children can study at night because they have lights. They can now charge a phone and get online to learn. It is life changing,” states Meseisi.

The Shell Farming programme is equally impactful, supporting ambitious farmers to commercialise operations in a non-traditional way.

“We are supporting around 50 farmers in the Eastern Cape, helping to commercialise sunflower and soybeans. The hope is that in the future we can perhaps purchase feedstock for our biodiesel supplies. We want to start small and scale up,” details Meseisi.

“We also run the Shell Livewire Programme and that is about enterprise and supplier development,” he adds. “We support younger people who want to start businesses but require coaching to get the business off the ground. We also support smaller companies and encourage them to become our suppliers over time. We see this as an important programme, contributing beyond the role that we play. We want to see others scale up and employ people.”

In the education space, Meseisi remains a big supporter of the Shell Bursary Programme which has been running in country for more than four decades and has supported many to grow beyond which they would have been able to do alone.

“It is something I am very proud of,” he says, “and there are now a lot of government leaders, community leaders, doctors, engineers etc who have been beneficiaries of the Shell Bursary programme. At the time, Shell was providing these bursaries even when it was not seen as the politically correct thing to do, and we continue with that today, supporting students from a disadvantaged background.”

MASTER OF THE DEAL?

With many interested parties coming forward to discuss the future of SDSA, Meseisi is a busy Country Chair. There are so many elements to consider when divesting from an asset of such great opportunity and national importance. Thankfully, Meseisi is uniquely qualified to lead the process. 

A distinguished operator in South Africa’s foreign ministry in his early career, Meseisi was part of a team that handled South African relations with the USA. He worked from Pretoria with all US embassies, agencies, and bodies that came in and out of South Africa. He was also positioned in Washington DC in the SA embassy. In 2011, he was appointed by the UN as the South African liaison officer, working from Germany, as part of the climate change secretariat. This, he says, gave great insight into the build up to the Paris Agreement of 2015.

“SA hosted the climate change conference in Durban in 2011. It was a precursor to Paris but post Copenhagen which was a more difficult conference. We developed the Durban platform which stated that by 2015 the world would have to agree on a new mechanism for dealing with climate change.

“This experience was great as I was exposed to both political and economic activity. I was exposed to nuclear energy agreements, and I worked for the SA government as the US created sanctions on Iranian oil. I was also involved in discussions around development of AGOA and later involved in the discussions around poultry trade.”

He later worked on South Africa’s involvement in the G20 forum supporting the Finance Ministry, before joining to private sector at an interesting time. Before the onset of the Covid-19 pandemic, Meseisi joined Johnson & Johnson, overseeing government affairs and policy for southern Africa. He ended up sitting on the boards of two companies within the various business units of the group, and grew further to head government affairs and policy across south, east, and west Africa. When the pandemic took hold, he was at the coalface ensuring delivery of expertise.

“I helped with the rollout of the J&J Covid-19 vaccine and I had the full mandate to negotiate a deal with the SA government, which we did successfully. I also supported negotiating deals with the African Union for J&J vaccines – it was an interesting time.”

Next, he joined Shell as Head of Corporate Relations, looking after internal and external communications as well as government relations and community stakeholders, before taking his current role as Country Chair.

Completing a complex deal for the divestment of the SDSA business is vital, as the Shell-owned SAPREF refinery–the largest in the country–is widely seen as a key strategic asset for national energy security. The state-owned Central Energy Fund (CEF) was reported last year to have agreed to acquire SAPREF from Shell and bp, aiming to restart capacity at the 180,000 barrels per day site.

With negotiations ongoing, Meseisi is clear that only the right deal for both Shell and its stakeholders in South Africa will be considered. He insists that SDSA remains a robust business.

“It’s a strong business that is well-positioned. No one will have to make major investments for growth,” he says, reminding of the important role the company plays in wider society, beyond the petrol pump.

“You have to think about access to energy that is essential, especially on a continent like Africa. Secondly, you have to consider affordability and sustainability. This space has a societal challenge and that is what draws me in. We are making contributions to society at large. What we do today at Shell definitely moves society forward. In practical terms, people are at work because of the energy we provide – they can do many different things. We understand that we have a role to play in terms of bringing more value and energy with less emissions. That is our ambition as a company – to make sure that we are not stopping in our provision of the energy that the world needs today and we are making a contribution to a sustainable world of the future.”

Whatever the future holds for SDSA, the business case remains solid, and that is thanks to the excellence that has been imbued across all touchpoints by local leadership over the past 15 years. This is a South African success story to be celebrated and will undoubtedly continue as a source of inspiration beyond the horizon.