China Petroleum & Chemical Corporation (Sinopec) is getting closer to a deal to buy Chevron’s South African oil assets for about $1 billion, reports Reuters, citing people familiar with the matter. If Sinopec succeeds, the Chinese oil and gas company will be securing its first major refinery in Africa.
Chevron had in January 2016 said it was looking for buyers for 75 percent of its South African business unit, as part of a three-year asset divestment program announced in 2014. Mark Nelson, Chevron’s President for International Downstream said the decision to sell demonstrates the company’s continuing focus on balancing its global portfolio with its long-term business priorities.
Sinopec is reportedly close to a deal with Chevron after an auction that lasted more than a year for its refinery, retails business and storage terminals.
Apart from Asia’s largest oil refiner, Total, Glencore and Gunvor had all considered the assets. Last June, South Africa’s Strategic Fuel Fund (SFF), which manages the country’s fuel reserves, also offered to buy Chevron’s assets in the country. The SFF said its offer was made as part of its mandate to ensure a security of supply of liquid fuels.
While Sinopec’s reported offer will keep the 110,000 barrels per day Chevron refinery in Cape Town running, sources told Reuters that there is no assurance the deal would not fall through.
Chevron, which has been operating in South Africa for over a century is a leading refiner and marketer of petroleum products in the country. Apart from the refinery in Cape Town, the U.S. oil major also has interests in a lubricants plant in Durban. It markets its products through a network of Caltex service stations. Caltex is a petroleum brand name of Chevron Corporation, created in 1936 in a partnership with Texaco.
Euronext Paris-listed financial holding company Rothschild & Co is advising Chevron on the sale of the assets.