State fund eyes Chevron’s SA business

Chevron - []

According to IOL The state-owned Strategic Fuel Fund (SFF), the guardian of South Africa’s strategic crude oil stocks, had made an offer to purchase oil major Chevron Corporation’s South African business, the SFF said in a statement yesterday.

Chevron earlier this year put its 75% stake in Chevron South Africa on sale.

The SFF’s purchase of the Chevron stake will effectively give the government a presence in the South African fuel retail market, a market that is currently dominated by Chevron’s international peers, BP and Shell. Malaysian national oil company Petronas owns Engen.

Although it owns a gas-to-liquids refinery in Mossel Bay, national oil company PetroSA does not sell refined fuel products to the public and instead supplies major oil companies operating in South Africa.


Chevron’s assets in South Africa include the 110,000 barrels-a-day oil refinery in Cape Town. The company also owns a network of Caltex-branded service stations and a lubricants plant in Durban.

“Given the strategically important role that (the Chevron) assets play in South African job creation, liquid fuels production and their national financial impact, and given the SFF mandate to ensure security of supply of liquid fuels, SFF has decided to participate in the sale and expressed interest in the acquisition of the Chevron assets,” says SFF In a statement yesterday.

SFF said it expressed its interest in the assets shortly after Chevron’s announcement of its decision. The company said it submitted a commercial offer for the assets to Chevron last Friday.

“In order to avoid misunderstanding in relation to the fairness or transparency of the process, SFF have also clarified its position to Chevron and its advisers as regards the status of SFF crude storage and supply assets, which historically have been associated with Chevron’s refinery. SFF looks forward to a transparent, equitable and competitive sale process.

“SFF will continue to act as a strategic custodian and participant in the downstream industry; mandated to ensure security of supply and optimal provision of liquid fuels to the South African economy,” the statement said.

Growth strategy

This is not the government’s first attempt to get into the sector. PetroSA has been eyeing entry into the so-called downstream market as part of its growth strategy. Consistent with its long-standing ambition to enter the South African retail market, in its 2015 annual report, PetroSA had highlighted that entry into the downstream market was among its growth initiatives.

Commenting on the possible overlap in roles between PetroSA and SFF, SFF chief executive Sibusiso Gamede was yesterday adamant that there would be no duplication.

“We are going into this as Central Energy Fund. It is not just SFF (even though) it is led by SFF,” says Gamede.

“Our main role is to ensure security of supply. The risk facing South Africa is not crude oil. It is the shortage of refined (petroleum) products,” says Gamede explaining the rationale of the offer for the stake.

He said it was “strategic” for the government to gain control of the Chevron assets.

“It is important that the assets are acquired by government. At the moment, South Africa is a net importer of refined petroleum products. Losing the Chevron refinery will make the situation worse,” he said.

He said the government could not do much if a new private sector owner of the refinery decided to reduce production.

“There is no guarantee that (a private sector buyer) will maintain or increase production,” he said.

He said the SFF was still waiting for Chevron’s response to its offer.