China Petroleum and Chemical Corp. (Sinopec) is nearing a deal to buy Chevron’s South African oil assets for up to $1b to secure its first major refinery on the continent, Reuters reported.
According to two people familiar with the transaction, Sinopec, Asia’s largest oil refiner, was the last bidder remaining, and close to completing a deal with the US oil major, Engineering News informed.
South Africa government’s desire to keep the refinery operating has nevertheless proven to be a major stumbling point for buyers who would prefer to convert the site into a more profitable storage terminal, the sources said.
Sinopec is in discussions with the government on ways to keep the 110,000b/d refinery in Cape Town running, but talks could still fail.
Chevron’s Spokesman, Braden Reddall, said “the process of soliciting expressions of interest in the 75% shareholding is ongoing.” The remaining 25% interest is held by a consortium of black economic empowerment shareholders and an employee trust.
If the deal is finalized, it will be Sinopec’s first refinery asset in Africa, forming a part of the Chinese major’s global fuel distribution network.