PETROCONNECT, a fuel retail industry professional services provider, yesterday said the sale of Sapref to the Central Energy Fund (CEF) marked a significant step towards reinforcing South Africa’s energy security which has been under scrutiny in recent months.
Mark Harper, director and co-founder of PetroConnect, said they recognise the crucial role Sapref has played in the local energy landscape since its establishment in 1963.
“The refinery’s contribution to economic development and energy supply has been invaluable, and we commend the dedicated management team and staff for their enduring commitment, especially during challenging periods such as the KwaZulu-Natal flooding in April 2022,” he said.
Harper added that the move did not only safeguards jobs, but also facilitated the ongoing development and investment in local refining capacity.
The news broke over the weekend that bpSA and Shell Downstream SA (SDSA) had reached an agreement for the sale of the Sapref precinct and remaining assets to state-owned entity CEF, after the refinery was shut down in 2022.
The sale included the SDSA and bpSA interests in the Sapref land and other associated assets which include tanks, process units, pipelines to and from Sapref to the Island View terminal, and the Single Buoy Mooring for crude imports.
Shell SA said 48 permanent employees of Sapref who work at the refinery site together with 16 trainees would also transfer to the CEF.
The sale will be subject to all applicable regulatory approvals and the parties have opted not to disclose the commercial terms.
Aluwani Museisi, country chair at SDSA, said Sapref has played a significant role in relation to local energy security and economic development, thanks to its extremely committed management team and staff.
“This transaction will allow CEF to build on Sapref’s history and invest in local refining going forwards. SDSA will continue to manage local supply to customers through our extensive terminal network,” Museisi said.
Meanwhile, Harper said PetroConnect has been very wary of South Africa’s increasing reliance on fuel imports.
“Currently, South Africa relies on imports for about 40% of its domestic fuel needs, a figure that has risen due to the halting of operations at key refineries,” he said.
“This reliance poses risks of intermittent fuel shortages and greater vulnerability in critical supply chains. The acquisition of Sapref by the CEF is a strategic move that we hope will reduce this dependency by enhancing local refining capabilities.”
Harper said they supported CEF’s vision for building on Sapref’s legacy and they were looking forward to seeing how this strategic acquisition will enhance South Africa’s refining capabilities and contribute to a more resilient and sustainable energy future.
“We are confident that under CEF’s stewardship and under correct governance, Sapref will continue to be a cornerstone of the nation’s energy infrastructure,” he said.
Reggie Sibiya, CEO at the Fuel Retailer Association of Southern Africa (FRA) said this was an interesting buy in many aspects.
“First, the increasing levels of importing finished product versus crude oil still to be refined, second the competitiveness of global refineries against local refinery, third the levels of infrastructure refinery upgrades and its funding model, the working of accommodation agreements between the government and major oil suppliers to various brand networks,” Sibiya said.
“Only time will really tell whether this was a wise move or not,” he said.
Sapref was established in 1963 as a 50:50 joint venture between bpSA and SDSA.
It was the largest crude oil refinery in the country with 35% of South Africa’s refining capacity, processing a capacity of 180 000 barrels of crude oil per day.
The refinery was severely impacted by the KwaZulu-Natal flooding in April 2022, which led to the refinery being non-operational.
BUSINESS REPORT