BP and Shell sell stake in South Africa’s largest refinery to government’s Central Energy Fund

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  • Bloomberg reports that BP Southern Africa (Pty) Ltd. and Shell Downstream South Africa (Pty) Ltd. have agreed to sell their 50% stakes in SAPREF (Pty) Ltd., South Africa’s largest refinery, to state-owned Central Energy Fund SOC Ltd.
  • The sale will be subject to regulatory approvals.

The sale includes the oil companies’ interests in the land at SAPREF (Pty) Ltd. and other assets including crude and finished product tanks, process units, pipelines to and from the refinery to Island View terminal and the Single Buoy Mooring for crude imports, according to an emailed statement.

Located in Durban, SAPREF was commissioned in 1963 as a 50:50 joint venture between bpSA and SDSA. At its peak, the refinery carried a 180,000 barrels per day capacity. It currently manages the Single Buoy Mooring on behalf of the oil companies that own it. Since pausing refinery operations in 2022, SAPREF has continued to service the two companies’ market fuels requirements via imported fuels.

“Acquisition of these assets will form the hallmark of CEF’s investment and growth strategy in the energy value chain geared to lay a solid foundation to address the challenges that lie ahead in the security of South Africa’s energy future,” Mineral Resources and Energy Minister Gwede Mantashe said in a separate statement

Earlier this month, Shell  announced in a statement that it is divesting its majority shareholding in Shell Downstream South Africa (SDSA) after a comprehensive review of its businesses across all regions.

“As a result of this review, Shell has decided to reshape the downstream portfolio and intends to divest our shareholding in SDSA … this decision was not taken lightly,” a Shell statement said. It did not specify when the decision will take effect.

SDSA was formed after Shell South Africa and black empowerment company, Thebe Investment Corporation, agreed a decade ago to merge Shell South Africa Marketing and Shell South Refining businesses. Thebe held a 28% equity stake.

Shell has seen a pushback on its seismic survey exploration efforts off the Wild Coast of South Africa by environmental groups which has brought the venture to a standstill. Read more

Shell SA has also been involved in the failed Karpowership SA bid to generate 1220MW of power from three floating gas power plants in South Africa. The country’s Mineral Resources and Energy Minister, Mr Gwede Mantashe, awarded the three Karpowership projects preferred bidders status in the country’s Risk Mitigation IPP Procurement Programme (RMIPPPP). The programme has been a failure where there are key contractual issues, environmental approval challenges and tender rigging allegations

The ANC government put all their eggs in one basket, a risk for the country, by authorising an exclusive supply agreement to Shell South Africa for the bid which has failed. The country’s energy utility, Eskom, has pulled grid access allocation for the projects. Read more

The investment arm of the ANC, the Batho Batho Trust, has a 51% per cent stake in Shell South Africas black economic empowerment partner, the Thebe Investment Corporation. The ANC’s links to Shell are very well explained by respected New24 journalist Lameez Omarjee. Read more

South Africa faces national elections this week on Wednesday 29th May. It is expected that the country will have a coalition government which may trigger a redress of the country’s up and downstream oil and gas sectors.

The country’s current supply of gas (from Mozambique) to industrial users ceases in 2026 and the recently released draft Gas Master Plan fails to the address the impending crisis. Read more

Author: Bryan Groenendaal


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