AFK Stock Showdown
Decision Could Come Within Weeks On Chevron South Africa Assets Sale
By Dana Sanchez Published: January 4, 2017, 11:28 am
Chevron refinery, Cape Town. Photo: 702.co.za
A year ago, U.S. oil major Chevron Corp. said it was considering selling its 75 percent stake in its South African unit. A decision could be imminent within weeks, Bloomberg reported.
The selling price has been estimated at $1 billion for the assets in South Africa and neighboring Botswana, according to Reuters.
Chevron announced in 2014 that it would be selling off some assets — part of a trend where major oil companies are selling low-margin assets, especially those in the downstream sector, Independent Online reported.
Chevron South Africa assets include a refinery in Cape Town that produces 110,000 barrels a day, a lubricants plant in Durban and about 800 Caltex service stations. It’s one of South Africa’s top five petroleum brands and has had a presence in the country for more than 100 years, according to its website.
Some of the firms that have shown an interest in buying Chevron’s South Africa assets include French oil major Total SA, Switzerland-based commodity trading and mining company Glencore, Switzerland-based energy and commodity trading company Vitol Group and China Petroleum & Chemical Corp.
Sasol, the world’s largest gas-to-fuel producer, said in July it was considering buying the majority stake, Reuters reported.
Low oil prices and uncertainty around future prices will make it difficult for potential buyers to fund an acquisition themselves or to raise capital externally, said Richard Weissenberg, business unit leader for chemicals at Frost & Sullivan Africa, Independent Online reported.
Switzerland-based crude oil trader Gunvor Group is suing Cerberus Capital Management of New York for $829,020 in New York Supreme Court alleging that the private equity firm refuses to pay its share of costs incurred when the two companies made a failed $650 million bid for Chevron Corp. assets in South Africa, Bloomberg reported.
Co-founded by billionaire Gennady Timchenko, Gunvor said it spent about $1.6 million hiring advisers and consultants to perform due diligence on Chevron’s South Africa assets.
Gunvor and Cerberus Capital teamed up to make a bid “approaching $650 million,” according to the lawsuit. The offer was rejected by Chevron soon after, Gunvor said, according to Bloomberg.
The move by oil majors presented opportunities for smaller and independent oil companies to buy up assets in other African countries, Independent Online reported in September.
Singapore-based Puma Energy said it is constantly looking for opportunities in the 49 markets where it operates. In 2011, Puma acquired Chevron’s fuel marketing businesses in Namibia. Puma also bought Chevron’s assets in Swaziland in 2014 when Chevron decided to exit the downstream market. Acquired assets included fuel service stations, bulk fuel storage facilities and a portfolio of industrial customers.
Majority-owned by the Dutch Trafigura and the Angolan Sonangol Group, Puma is based in Singapore.
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