State-owned Company Buys Sapref

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South Africa’s Central Energy Fund SOC has finalized an agreement to buy the Sapref oil refinery in Durban, from Shell and BP – transacting a site that includes one of the few base oil plants in Sub-Saharan Africa.

The agreement was announced yesterday by South Africa’s Ministry of Mineral Resources and Energy, which did not mention the cost of the deal. Central Energy did not respond by deadline to a request for comment, but the ministry said the company bought Sapref to help reverse a decline in local capacity to make fuels.

“This new emerging trend was not only threatening the country’s economic stability and security of supply of petroleum products, but also meant the exportation of jobs that are so needed in the country,” the ministry said in a news release.

The overall refinery has capacity to process 180,000 barrels per day of crude oil, and the base oil plant has capacity to make 172,000 metric tons per year of API Group I oils.

The refinery has been closed since March of 2022, when Shell and BP, each of which owns 50%, said they were halting operations because of a need to reduce costs. At that time the companies said their goal was to make the site more financially viable and reopen but that they might sell or simply close it.

A month later the refinery sustained extensive damage during a severe flood – damage that the companies estimated would take three to five years to repair. The companies later announced an initiative to cut staff in order to reduce operating costs for a repair program, but in June of last year the co-owners scrapped the repair plan.

The ministry’s press release did not mention any details about plans for repairs, nor did it mention the base oil plant.

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