Shell Sells South African Assets Amid Middle East Production Slump

Shell PLC announced a deal to sell its South African downstream business, including 580 fuel stations and aviation operations, to the Abu Dhabi National Oil Company for an implied enterprise value of $1 billion. The transaction, expected to close in 2027 pending regulatory approvals, will allow the Shell brand to remain in South Africa through licensing.

In a July 7 trading update, the company reported a sharp decline in integrated gas production, which dropped to between 610,000 and 650,000 barrels of oil equivalent per day from 909,000 in the first quarter. This slump followed missile attacks in March on the Ras Laffan Industrial City and the Pearl gas-to-liquids plant in Qatar, events tied to a broader war with Iran that began on February 28 and saw the closure of shipping in the Strait of Hormuz.

Despite the production losses, Shell expects stronger second-quarter performance due to improved refining margins and significantly higher trading and optimization earnings. These gains were driven by soaring crude oil and gas prices triggered by the regional conflict. While Brent crude peaked above 120 US dollars per barrel, prices stabilized near 73 dollars following an interim peace deal between the United States and Iran. Following the update, Citi raised its second-quarter earnings-per-share forecast for the company by 13%.