The Chevron South African door to a new owner has re-opened. Although Sinopec emerged as the successful bidder earlier this year in a process which started a year ago, it is understood the Glencore – one of the original bidders with Total and Gunvor – is exercising a pre-emptive right and has to match the Sinopec offer
Although Chevron has been tight-lipped, the door has quietly re-opened to Glencore for the 75% stake which Chevron has in the South African operations.
Chevron United States announced in January 2016 that it planned to sell 75% of its South African business unit, which includes a 110 000 barrels-a-day refinery in Cape Town. In April 2017 it was announced that Sinopec – the giant Chinese oil firm – was the preferred bidder.
So there will be a lot of snot en trane in political circles if Swiss-based Glencore snatches the deal – believed to be in the region of R1 billion, a wee bit more than the R900 million coughed up by the Chinese.
The Sinopec preferred bidder announcement took the oil industry by storm. It is the biggest oil refiner in the world. It operates – according to energy analyst Keith Bryer – 30 500 service stations. In 2016 it sold 58 million metric tons of petrol.
But JSE-listed Glencore – which has had its nose bloodied in the coal industry, where its business with Eskom was snatched away by a Gupta company, Tegeta – is back in the game.
On Glencore’s radar is Chevron’s refinery in Milnerton and Chevron’s interests in a lubricants plant in eThekwini (Durban). Chevron also has a network of Caltex service stations – making Chevron one of South Africa’s five petrol brands.
Industry sources indicate that Chevron is back in a bid which apparently matches the Sinopec offer – actually about R100 million more is involved – and the regulatory processes have to be followed “chapter and verse”. In terms of the rules of engagement, Glencore is exercising a pre-emptive right. It must match an offer on the table.
Excluded from the Sinopec deal are the network of service stations, which are held by franchisees.
It is understood that the Chinese would like to absorb the retail arm of the business as well, although many of the retailers wish to hang on to their businesses. Some 40 000 Sinopec retail shops are housed on the bulk of their forecourts. A deal with Glencore is likely to allow the status quo to remain, allowing franchisees to stay.
If Sinopec is pushed out there will be a political fallout, because China is a leading country in the BRICS bloc – which includes South Africa. It is clear that the South African political establishment favours the sale with Sinopec.
Braden Reddall, senior external affairs advisor, downstream, for the Chevron Corporation’s division for policy, government and public affairs replied to questions about negotiations with Glencore.
He said: “Chevron is subject to a confidentiality agreement and cannot comment on this matter.”
Watch this space.