Shell ends S Africa bitumen truck retail business

Market: Oil products
04/03/24

Shell has ceased retail truck supply of bitumen in South Africa, and instead plans to ship bitumen cargoes into the country's ports that will be offered to local importers on a delivered (CFR) basis.

In a letter sent to its South African customers, Shell Bitumen South Africa said that "effective March 1st, we will no longer be offering Shell's bitumen on retail terms in South Africa. Going forward, we will be offering bulk bitumen by ship to South Africa through our Trading & Supply channel".

A source familiar with developments today said that as part of the move Shell will "progressively close" its Black Rhino bitumen storage facility in the Durban area, which has around 9,000t capacity, although no precise timetable for the closure could be provided.

South Africa has become increasingly dependent on bitumen imports that, according to one local supplier, now account for as much as 80pc of its needs. All but one of the country's bitumen-producing oil refineries have shut in the past few years, including the 180,000 b/d Shell-BP Sapref joint venture plant in Durban. Shell and BP said in February 2022 that the refinery would shut down indefinitely as they mulled future options, including a possible sale. No such deal has been reached. Sapref said in May last year it planned to lay off 350 employees after the Durban refinery suffered extensive flood damage a year earlier.

The 108,500 b/d Natref refinery in Sasolburg is South Africa's last remaining bitumen-producing refinery. Some market participants expect it to stop producing bitumen because UK energy company Prax Group agreed to buy TotalEnergies' 36.36pc minority stake in the operating company, a joint venture with local integrated Sasol. Prax ceased bitumen production at the 105,700 b/d Lindsey refinery in the UK early last year after buying the facility from TotalEnergies in 2020.

South Africa imported nearly 180,000t of bitumen in specialised tankers delivering into Durban and Cape Town last year, according to Vortexa, compared with around 100,000t in 2022 and negligible amounts in 2021. Several international trading and supply firms compete to supply cargoes from the Mideast Gulf, Pakistan, Europe and west Africa into local importers.

Some bitumen is also shipped to South Africa in heated bitutainers, and smaller amounts arrive in drums and in bags.

By Keyvan Hedvat

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