South Africas Competition Commission has endorsed Sinopecs bid to acquire a controlling stake in Chevrons downstream operations in the country, the latest step in a back-and-forth competition for the business.
Sinopec has agreed to pay approximately 900 million rand (U.S. $73 million) for a 75 percent stake in Chevrons downstream businesses in South Africa and all of the companys downstream business in Botswana. The South African assets include a lubricant blending plant in Durban and a fuel refinery in Cape Town, along with fuels marketing, distribution and wholesaling.
Sinopec originally reached a deal in March of 2017 to buy those operations. In October, however, Swiss mining company Glencore said it would finance a purchase of the same assets by a South African investment firm – Off the Shelf Investments 56 (RF) Pty.
Off the Shelf Investments 56 is owned by African Legend Energy Holdings, a Johannesburg-based investment firm, and had rights to supersede Sinopecs deal under South African laws that aim to empower black-owned enterprises. OTS already owns the other 25 percent stake in Chevron South Africa.
A Jan. 3 statement by the Competition Commission signals that Sinopec is back in the drivers seat, although it does not explain what became of OTSs bid or even mention that company. Neither OTS nor Glencore could be reached for comment yesterday, and Chevron declined to comment.
In recommending approval of Sinopecs acquisition, which would be made through Hong Kong subsidiary SOIHL Hong Kong Holding Ltd., the commission noted that Sinopec does not currently operate in South Africa and said that the deal should not lessen competition. It added that Sinopec agreed to make significant investments to turn the 100,000 barrel per day Cape Town refinery into a world class facility and to preserve and expand the number of fuel stations operated by black-owned businesses.
The final sale must be approved by South Africas Competition Tribunal, which is expected to render a decision in March or April.