South African government reaches agreement with China’s Sinopec for Chevron SA assets

China’s Sinopec Corp is set to beat Glencore to the US$900 million purchase of Chevron’s South Africa and Botswana assets, after the SA government confirmed it had reached an agreement with Sinopec.

However, the transaction is currently pending final approval with the agreement between the government and Sinopec centred on public interest issues.

“Implementation of the transaction is conditional on approval by the competition authorities of South Africa, and will be concluded unless the minority shareholders in Chevron South Africa successfully implement their right of first refusal,” said Sinopec in a statement.

The Chinese oil giant’s acquisition was placed in doubt in October when minority shareholders in Chevron SA exercised pre-emption rights after the deal was delayed, which resulted in Glencore placing a $937 million bid.

However, Sinopec is now likely to succeed in the battle for a 75% share in Chevron’s SA subsidiary that runs a 100,000 barrels per day oil refinery in Cape Town, a lubricants plant in Durban and 820 petrol stations along with 220 convenience stores across South Africa and Botswana.

Sinopec has also promised to make major investments to upgrade and modernise the refinery in Cape Town if it succeeds in its bid, along with other commitments to help develop black-owned businesses.