Adnoc widens Africa push with Shell deal

ADNOC Distribution has agreed to buy Shell Downstream South Africa in a $1 billion deal that gives the Abu Dhabi fuel retailer control of one of South Africa’s largest petrol station networks and marks a decisive expansion of Gulf capital into Africa’s downstream energy market.

The agreement covers 100 per cent of Shell Downstream South Africa from Shell South Africa Holdings, with the enterprise value subject to adjustments for net debt and working capital. The business includes 580 company-owned and dealer-owned fuel stations, wholesale fuel supply, aviation fuels, marine fuels and lubricants operations. The transaction is expected to close in 2027, pending regulatory approvals and other conditions.

The deal will not immediately remove the Shell name from forecourts. ADNOC Distribution plans to enter a long-term brand licensing arrangement after completion, allowing Shell-branded service stations and lubricants to continue operating in South Africa under the new ownership structure. The move is designed to preserve customer familiarity while shifting control of the business to ADNOC Distribution.

Shell Downstream South Africa sold about 3.5 billion litres of fuel in 2025 and operated 360 convenience stores. The network is considered the third-largest fuel retail platform in South Africa by number of service stations, giving ADNOC Distribution a substantial operating base in a market where regulated margins, established road transport demand and a large motoring population support steady cash generation.

ADNOC Distribution expects the acquisition to increase earnings per share by 6 per cent in the first full year after completion. The company also expects returns to exceed its internal hurdle rate for fuel and convenience retail investments. The transaction adds scale to its international business, which already includes service stations in Saudi Arabia and Egypt, alongside its core network in the UAE.

Eng Bader Saeed Al Lamki, chief executive of ADNOC Distribution, described the transaction as a significant milestone in the company’s international growth strategy and said South Africa offered a “high-potential, well-regulated fuel retail sector”. He said Shell Downstream South Africa had deep roots in the local economy and would help ADNOC Distribution diversify its platform and create long-term value.

ADNOC Distribution plans to sell a 28 per cent stake in the acquired business after completion to a local empowerment partner and an employee stock option plan. The structure is intended to align the ownership of the business with South Africa’s Broad-Based Black Economic Empowerment framework, which remains a central requirement for major transactions in sectors with high consumer and infrastructure exposure.

The deal ends a long chapter for Shell’s downstream presence in South Africa, where the group has operated for more than a century. Shell began a review of its South African downstream business in 2024 as part of a wider effort to reshape its global portfolio and focus capital on higher-return activities. The group has been reducing exposure to parts of its retail and refining footprint while retaining brand value through licensing models in selected markets.

South Africa’s fuel sector has been undergoing significant change as refining capacity has tightened and the country has become more dependent on imported refined products. The Sapref refinery, historically linked to Shell and BP and once the country’s largest refinery, has been idle since 2022. Other refinery closures and disruptions have increased the importance of reliable distribution networks, storage capacity and wholesale fuel logistics.

For ADNOC Distribution, the acquisition strengthens its ambition to become a global mobility and convenience retailer rather than a domestic fuel station operator. As of March 2026, the company operated 1,032 service stations, including 568 in the UAE, 219 in Saudi Arabia and 245 in Egypt. It also operated 386 ADNOC Oasis convenience stores, 37 vehicle inspection centres and 400 electric vehicle charging points under its E2GO brand in the UAE.