Chevron and Sinopec’s South Africa deal gets green light


CHEVRON Corporation ‘s efforts to divest its stake in its South Africa business to China Petroleum & Chemical Corporation (Sinopec), has been approved by the country’s Competition Commission.

Notably, Sinopec will acquire a 75 percent stake in the assets through its subsidiary, SOIHL Hong Kong Holding Limited. With the completion of the deal, SOIHL – a manufacturer and supplier of petroleum and petrochemical products – will enter the South African petroleum market.

In 2016, Chevron had stated its intention to unload 75 percent interests in its South Africa assets as part of its three-year divestment goals announced in 2014. Many energy firms like France’s integrated oil and gas major Total , Switzerland-based diversified resource company, Glencore and Russian oil trader, Gunvor Group had put in bids to snap up stakes in Chevron’s South Africa business. However, Sinopec was selected on better terms and conditions it offered.

Following the approval from the Competition Commission, Sinopec will acquire 75 percent controlling stake in Chevron’s South Africa and Botswana assets for $900 million including a 100,000 barrel per day oil refinery in Cape Town, a lubricants plant in Durban and a network of around 820 gas stations.

Sinopec will establish an office in South Africa to enable it to supervise its operations in the region. No employees from the facilities will be curtailed following the acquisition. The remaining 25 percent interest will be owned by local shareholders.

Sinopec will continue with Chevron’s Caltex brand name for the retail fuel stations for around five years till it forms a rebranding strategy.  The company will also be making technological upgrades at the acquired assets to meet the local demand and drive growth for the indigenous oil industry.

The deal is in line with Chevron’s $15bn divestment program announced in 2014 as the company focuses on balancing its global portfolio with long-term business priorities. It will help Chevron cut costs and streamline its business models to help it concentrate more on the assets producing higher margin barrels.



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