Sinopec ex­tends R6bn in­vest­ment for Chevron’s SA re­fin­ery

Pretoria News - - BUSINESS REPORT - Staff Reporter

SINOPEC, one of China’s largest state-owned com­pa­nies, has un­der­taken to in­vest R6 bil­lion in South Africa to up­grade and mod­ernise the Cape Town-based oil re­fin­ery owned by Chevron South Africa, a sub­sidiary of US com­pany Chevron, if it suc­ceeds in its bid to ac­quire con­trol of Chevron South Africa, and to use South Africa as its base to ex­pand its African re­fin­ing and down­stream busi­nesses.

This un­der­tak­ing is part of a com­pre­hen­sive agree­ment with the com­pany on public in­ter­est is­sues, an­nounced yes­ter­day by Ebrahim Pa­tel, Min­is­ter of Eco­nomic De­vel­op­ment.

Chevron’s South African as­sets in­clude an oil-re­fin­ery in Cape Town with a name-plate ca­pac­ity of 100 000 bar­rels a day, a lu­bri­cants blend­ing plant in Dur­ban, stor­age tanks and dis­tri­bu­tion fa­cil­i­ties as well as about 850 fuel ser­vice sta­tions trad­ing un­der the Cal­tex brand.

The com­pany em­ploys about 1 200 work­ers di­rectly and it re­ports that it sup­ports about 56 000 jobs in­di­rectly. Sinopec made an of­fer to buy the com­pany’s lo­cal as­sets for $900 mil­lion (R11.17bn).

The com­mit­ment by Sinopec to in­vest in the re­fin­ery ca­pac­ity will en­hance and in­crease ef­fec­tive out­put of lo­cally-re­fined oil prod­ucts.

“The agree­ment also pro­vides for Sinopec to in­crease the level of BEE own­er­ship in the lo­cal com­pany from 25 per­cent to 29 per­cent, which will in­clude an em­ployee own­er­ship com­po­nent. The Chi­nese in­vestor com­mit­ted to en­sure that no jobs are lost as a re­sult of the merger and that the com­pany will re­tain at least its cur­rent ag­gre­gate level of em­ploy­ment for a five-year pe­riod,” Min­is­ter Pa­tel said.


One of the more in­no­va­tive terms of the agree­ment pro­vides for Sinopec, which has a large petrol ser­vice-sta­tion net­work in China, to use that re­tail net­work at ser­vice sta­tions to sup­port the ex­port and sale of South African man­u­fac­tured prod­ucts to China.

The terms of the agree­ment with the Eco­nomic De­vel­op­ment Depart­ment ad­dresses the public in­ter­est con­di­tions that will be pro­posed to the Com­pe­ti­tion Tri­bunal for in­clu­sion in any reg­u­la­tory ap­proval of the pro­posed trans­ac­tion.

The trans­ac­tion it­self is sub­ject to such reg­u­la­tory ap­proval and fi­nal­i­sa­tion of the ex­er­cise of a Right of First Re­fusal in­voked by the cur­rent mi­nor­ity share­hold­ers.

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