In a major oil industry power play, Sinopec, one of China's largest state-owned companies, is bidding to acquire control of Chevron South Africa. On the table is an R6 billion proposed investment to upgrade and modernize the Cape Town-based oil refinery Chevron South Africa currently owns.
If Sinopec's bid to take over the faciility is approved, it has big plans for this new site. It plans to use South Africa as its base to expand its African refining and downstream businesses.
This undertaking is part of a comprehensive agreement with the company on public interest issues, announced today by Ebrahim Patel, Minister of Economic Development.
Chevron's South African assets include an oil-refinery in Cape Town with a name-plate capacity of 100 000 barrels a day, a lubricants blending plant in Durban, storage tanks and distribution facilities as well as about 850 fuel service stations trading under the Caltex brand. The company employs about 1 200 workers directly and it reports that it supports about 56 000 jobs indirectly. Sinopec made an offer to buy the company's local assets for US $900 million.
The commitment by Sinopec to invest in the refinery capacity will enhance and increase effective output of locally-refined oil products and improve health and safety standards in the refinery operation.
"The agreement also provides for Sinopec to increase the level of BEE ownership in the local company from 25% to 29%, which will include an employee ownership component. The Chinese investor committed to ensure that no jobs are lost as a result of the merger and that the company will retain at least its current aggregate level of employment for a five-year period," Minister Patel said today.