Shell and bp sell South Africa’s largest refinery two years after closure

Article by Amanda Jasi

SHELL Downstream South Africa (SDSA) and bp Southern Africa (bpSA) have agreed to sell each of their 50% stakes in assets at the Sapref refinery precinct to state-owned energy company CEF as the government seeks to secure the nation’s energy security.

The closed 180,000 bbl/d refinery and associated assets were acquired for a “symbolic” R1 (US$0.05), reports Bloomberg.

The sale includes bpSA and SDSA interests in the Sapref land and assets such as tanks, process units, pipelines, and crude import infrastructure. It does not include the Sapref brand, bpSA’s marketing businesses, associated terminal operations, or the lubricants blending and grease manufacturer Blendor.

Forty-eight permanent employees of Sapref that work at the refinery, along with 16 trainees will transfer with the facility.

Since operations stopped, Sapref has continued to service bpSA and SDSA market fuels requirements via imported fuels.

South Africa’s Department of Mineral Resources and Energy said there has been a serious decline in the country’s local refining capacity, which has impacted economic stability and security of supply of petroleum products, and caused the loss of much-needed jobs in the country. It expects the acquisition will help CEF address challenges in the nation’s energy security.

Taelo Mojapelo, CEO of bpSA, said: “We view this agreement as a positive outcome for bpSA, for South Africa’s fuel industry, and for the country as a whole. Sapref is an important refinery, the largest in southern Africa, but 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 – we believe CEF is well placed to take Sapref forward.”

Located in Durban, the Sapref refinery once provided 35% of South Africa’s refining capacity. Commissioned in 1963 as a 50/50 joint venture between bpSA and SDSA, the facility ceased operations in 2022, in the wake of stricter fuel specifications introduced by the government.

Article by Amanda Jasi

Staff reporter, The Chemical Engineer

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