Local control of Chevron SA set for tribunal hurdle

● A deal that will see resources giant Glencore and minority shareholders in Chevron SA get the majority stake in the fuel company will be heard by the Competition Tribunal this month.

The Competition Commission’s recommendation in August that the deal be approved, with conditions, has effectively nudged out Sinopec, whose bid was approved in March. Had the Chinese firm’s bid succeeded, it would have furthered ambitions by Brics members Brazil, Russia, India, China and SA to improve trade and investment within the bloc.

The tribunal hearing is set down for September 12. Sinopec was unavailable for comment.

Upon approval of the new deal, the minorities and Chevron will take ownership of Chevron’s South African business from October 1, a source close to the matter said. “Sinopec is nowhere here ... with regard to Chevron it’s finished,” the source added.

US energy corporation Chevron, which owns the Caltex brand of service stations, announced its intention to sell its 75% stake in January 2016.

Glencore was one of the companies that put in an earlier bid, as was Sasol. Glencore’s offer failed, and Sasol pulled out without disclosing reasons.

In 2017 Sinopec, China’s state-owned oil and gas company, announced its firm offer to buy the stake, which includes a network of more than 800 garages and a 100-barrel-a-day refinery in Cape Town, a lubricants plant and oil storage facilities.

The tribunal approved the bid in March, but minorities represented by special purpose vehicle Off The Shelf Investments exercised a pre-emptive right and offered $973m (R14.3bn) with financial backer Glencore.

Investors in Off The Shelf include African Legend Investments, Lithemba Investments, taxi company Santaco and Ditikeni Investments, which collectively hold 23% in Chevron SA. Two percent is held by Chevron staff.

The name Chevron SA will be changed in about a month’s time. But the new owners will continue with the Caltex brand for the next six years, after which a rebranding exercise will be undertaken.

The deal includes 100% of Chevron’s business in Botswana, where the bid received unconditional regulatory approval in November last year. The Caltex brand will also be maintained for six years in Botswana.

Among the conditions the new owners will have to agree to are preserving jobs, honouring the medical aid subsidy for Chevron retirees and maintaining a level of black empowerment shareholding, with a degree of enterprise development. The conditions are the same that were recommended in the Sinopec deal.

The buyers will also have to invest in improving the capacity of the refinery. Glencore has pledged to invest R6bn in the business.

The owners intend to participate in the domestic gas sector. SA has announced that it wants 12 gigawatts of gas in its energy mix, and Chevron has a pipeline from Saldanha Bay to Milnerton.