Sasol ditches Chevron asset sale
US oil company says the search for a buyer for 800 filling stations, Cape Town refinery and Durban lubricants plant will continue
Global oil refiner and marketer of petroleum products Chevron said the process of disposing of its assets in SA was continuing, although Sasol, an early interested party, had abandoned its bid to purchase.
The proposed disposal involves more than 800 filling stations operating under the Caltex brand.
Chevron also plans to sell its Cape Town refinery and a lubricants plant in Durban.
Petrochemical conglomerate Sasol has not divulged its reasons for withdrawing and Chevron is likewise tight-lipped about the disposal.
Sasol media relations specialist Matebello Motloung said that after assessing the opportunity a decision was taken not to participate in Chevron’s divestment process.
Chevron’s divestment has been controversial as among bidders for the assets — estimated to be worth $1bn — was the Strategic Fuel Fund (SFF), the state oil company and the government’s custodian of strategic fuel stocks.
The SFF’s offer, which was initiated in June by then acting CEO Sibusiso Gamede and then chairman Riaz Jawoodeen, did not have the support of its board or of its holding company, the Central Energy Fund. The permission of Energy Minister Tina Joemat-Pettersson and Finance Minister Pravin Gordhan was also not obtained.
Such permission is routine in transactions of this magnitude by state-owned companies.
The fallout led to the immediate dismissal of both Gamede and Jawoodeen and an investigation of all the SFF’s contracts by Joemat-Pettersson.
Several months later, the saga claimed another casualty when Joemat-Pettersson fired Central Energy Fund chairman Xolani Mkhwanazi for, she claimed, also pursuing a transaction with Chevron. However, Mkhwanazi — who held confidential, informal talks with Chevron to discuss the potential of a "small shareholding" as a strategic partner alongside the new owner — had never made Chevron an offer to purchase.
The action against him by Joemat-Pettersson has never been explained to the public or to Parliament.
The investigation commissioned into the contracts of the SFF has recently been completed, say insiders.
At the bidding table for Chevron’s assets were Total SA, Swiss mining company Glencore and China Petroleum and Chemical Corporation.
Chevron, which is based in California, first said it would be selling some assets at the beginning of 2014. Then it was part of a global trend among big oil and refinery companies to sell low-margin assets in the downstream sector.
Dow Jones Newswires reported on Thursday that deal-making across the energy sector was slow in 2016 when oil prices were below $45/barrel.
With the price of Brent crude now at about $56/barrel, unwanted assets can be sold at a fair price.
Analysts told Dow Jones Newswires that deals for exploration would be tricky if oil prices hovered between $55 and $60 per barrel in 2017 and buyers and sellers would still struggle to find a balance on the pricing of assets.