Sinopec to rejig Chevron network
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.