Macro

BP Southern Africa, Shell to Sell SAPREF Refinery Stakes to Central Energy Fund

BP and Shell to Sell 50% SAPREF Stakes to Central Energy Fund, Transferring 64 Employees

By Mackenzie Crow

5/25, 13:33 EDT
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Key Takeaway

  • BP Southern Africa and Shell Downstream South Africa are selling their 50% stakes in SAPREF refinery assets to state-owned Central Energy Fund.
  • The sale includes land, crude and finished product tanks, process units, pipelines, and the Single Buoy Mooring for crude imports.
  • This move aligns with BP's global strategy shift and aims to secure South Africa's energy future through CEF's investment.

BP and Shell's Strategic Exit

BP Southern Africa (Pty) Ltd. (bpSA) and Shell Downstream South Africa (Pty) Ltd. (SDSA) have agreed to sell their respective 50% stakes in the SAPREF Refinery Precinct to the state-owned Central Energy Fund SOC Ltd. (CEF). This transaction includes the companies' interests in the land at SAPREF (Pty) Ltd., crude and finished product tanks, process units, pipelines to and from the refinery to Island View terminal, and the Single Buoy Mooring for crude imports. However, the sale excludes SAPREF, bpSA’s marketing businesses, the Island View terminal operations, and the lubricants blending and grease manufacturer Blendcor (Pty) Ltd. The deal is subject to regulatory approvals.

Impact on Employees and Operations

The sale will see the transfer of 48 permanent employees and 16 trainees who work at the refinery site to the new ownership under CEF. This move is seen as a positive outcome for the employees and the broader South African fuel industry. "We view this agreement as a positive outcome for bpSA, for South Africa’s fuel industry and for the country as a whole," said Taelo Mojapelo, Chief Executive Officer of BP Southern Africa. The refinery, which was commissioned in 1963 as a 50:50 joint venture between bpSA and SDSA, had a peak capacity of 180,000 barrels per day. Since pausing refinery operations in 2022, SAPREF has continued to service the two companies’ market fuels requirements via imported fuels.

Strategic Considerations

BP's decision to sell its stake aligns with its global strategy, which no longer includes continued ownership of the SAPREF refinery. "Continued ownership does not fit with BP’s global strategy. Finding a buyer committed to the future of the refinery was an important consideration for us," Mojapelo added. The acquisition by CEF is expected to bolster South Africa's energy security. "Acquisition of these assets will form the hallmark of CEF’s investment and growth strategy in the energy value chain geared to lay a solid foundation to address the challenges that lie ahead in the security of South Africa’s energy future," said Mineral Resources and Energy Minister Gwede Mantashe.

Management Quotes

  • Taelo Mojapelo, CEO of BP Southern Africa:

    "We view this agreement as a positive outcome for bpSA, for South Africa’s fuel industry and for the country as a whole. Continued ownership does not fit with BP’s global strategy. Finding a buyer committed to the future of the refinery was an important consideration for us."

  • Gwede Mantashe, Mineral Resources and Energy Minister:

    "Acquisition of these assets will form the hallmark of CEF’s investment and growth strategy in the energy value chain geared to lay a solid foundation to address the challenges that lie ahead in the security of South Africa’s energy future."