Sinopec to re­jig Chevron net­work

Sunday Times - - BUSINESS TIMES - ASHA SPECKMAN

SINOPEC, which has agreed to buy a 75% stake in Chevron’s South African busi­ness, in­tends to over­haul its as­sets, in­clud­ing its petrol-sta­tion net­work once the takeover has re­ceived reg­u­la­tory ap­proval.

China’s largest pro­ducer and sup­plier of petroleum and petro­chem­i­cal prod­ucts an­nounced this week that it had signed a sales and pur­chase agree­ment, which also cov­ered as­sets in Botswana, for $900-mil­lion.

The re­main­ing 25% will be held by black eco­nomic em­pow­er­ment part­ners, whose iden­tity has not been dis­closed.

This gives the com­pany its first foothold in Africa but could also trig­ger a much-needed up­grade of Chevron’s re­fin­ery in Cape Town, which has the ca­pac­ity to pro­duce 100 000 bar­rels of fuel a day.

Chevron an­nounced its in­ten­tion to sell the stake early last year.

The costs to up­grade re­finer­ies in South Africa to new Euro­pean emis­sions stan­dards for cleaner fuel could run into bil­lions of dol­lars.

Lo­cal fuel spec­i­fi­ca­tions are in line with Euro 2 stan­dards, but re­finer­ies in other parts of the world have al­ready com­plied with the more strin­gent Euro 5 stan­dards.

Last year, the lo­cal petroleum in­dus­try told the gov­ern­ment it wanted costs for the up­grades at

It would im­ple­ment the nec­es­sary up­grades ‘step by step’

the coun­try’s six re­finer­ies to be sub­sidised through the fuel levy. How­ever, noth­ing has been fi­nalised yet.

On Fri­day, Sinotec, com­mu­ni­cat­ing through Brunswick in China, its public re­la­tions agent, did not elab­o­rate on how much it would set aside for the up­grade.

“Af­ter the deal closes, Sinopec will make ap­pro­pri­ate in­vest­ment plans once it has a deeper un­der­stand­ing of the un­der­ly­ing as­set qual­ity and sta­tus quo,” the com­pany said in re­sponse to ques­tions. It would im­ple­ment the nec­es­sary up­grades “step by step”.

“We will soon sub­mit rel­e­vant doc­u­ments to gov­ern­ment of­fices for ap­proval.”

Chevron Global En­ergy said in a state­ment it se­lected Sinopec out of sev­eral bid­ders in­clud­ing Sa­sol “due to the bet­ter terms and con­di­tions of their of­fer” and its plans to main­tain the as­sets in South Africa and Botswana.

The deal in­cludes the takeover of 820 Cal­tex-branded petrol sta­tions and 220 con­ve­nience stores across the coun­try and in Botswana and a lu­bri­cants fac­tory in Dur­ban.

The com­pany would “or­gan­ise a com­pre­hen­sive re­view of ex­ist­ing petrol sta­tions and pre­pare re­cod­i­fi­ca­tion and de­vel­op­ment plans to ad­dress any is­sues faced by such sta­tions”.

BMI Re­search, an in­ter­na­tional re­search group, said this week dis­pro­por­tion­ately high do­mes­tic fuel prices, con­strained growth in the min­ing and con­struc­tion sec­tors sub­dued the out­look for fuel de­mand in the coun­try. “Sinopec may view the up­grade as a longer-term op­por­tu­nity within the coun­try,” it said.

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