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Jul 2, 2024

Major Changes in Oil-Co’s-All You Need to Know 

In a landmark development for South Africa’s energy landscape, the Central Energy Fund (CEF) has acquired the Sapref fuel refinery. This strategic acquisition marks a significant shift in the country’s energy sector, aiming to enhance fuel security, stabilise supply chains, and contribute to the nation’s economic growth. In this blog, we will explore all you need to know about this major change in the oil industry and its implications for South Africa. 

Implications for South Africa's Fuel Industry 

The recent acquisition of the Sapref Refinery by the state-owned Central Energy Fund (CEF) marks a significant development in South Africa's fuel industry. This acquisition, involving the country's largest fuel refinery, has prompted discussions about its potential impact on various stakeholders, including fuel retailers and the broader economy. 

The Sapref Refinery was purchased by the CEF from bp Southern Africa and Shell Downstream South Africa (SDSA). The refinery, which has been temporarily shut since March 2022, has continued to serve the market's fuel requirements through imported fuels.  

PetroCONNECT’s Views in the IOL Newsletter

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.

Impact on Fuel Retailers 

Fuel retailers are closely monitoring the implications of the Sapref acquisition. While the refinery's closure may have initially raised concerns about fuel supply, the sale to the CEF provides reassurance for continuity. With ownership of Sapref now in the hands of a state-owned entity, fuel retailers may anticipate more stable supply chain dynamics and operational continuity. PetroCONNECT said they supported CEF’s vision for building on Sapref’s legacy and they look forward to seeing how this strategic acquisition will enhance South Africa’s refining capabilities and contribute to a more resilient and sustainable energy future. This could positively impact their ability to meet customer demand and maintain operational efficiency.   

Acquisition of the SAPREF assets will form the hallmark of CEF’s investment and growth strategy in the energy value chain that aims to create a solid foundation for addressing future challenges facing South Africa’s energy security amid the country’s declining domestic refining capacity which, to date, has left the nation a net importer of refined petroleum products, DMRE said.

Strategic Considerations 

The decision to sell Sapref reflects strategic considerations by bpSA and SDSA. Both companies cited reasons such as alignment with global strategies and the need to find a buyer committed to the refinery's future. For bpSA, which has operated in South Africa for a century, the sale represents a shift in focus towards other strategic priorities. Similarly, Shell's disinvestment aligns with its broader strategy, which includes exiting various businesses across regions.  

This acquisition presents an opportunity for CEF to shape the future of the refinery and the broader energy landscape. As discussions continue about the implications for fuel retailers and the economy at large, stakeholders must collaborate to ensure a smooth transition and maximize the benefits for all involved parties. 

Paving the Way for a Sustainable and Secure Energy Future

The Central Energy Fund’s acquisition of the Sapref fuel refinery is a transformative development in South Africa’s energy sector. This move not only secures a key asset but also positions the country to better manage its fuel supply, support economic growth, and advance environmental objectives. As the CEF integrates Sapref into the national energy framework, the focus will be on enhancing refining capabilities, ensuring stable fuel supplies, and promoting sustainable practices. This acquisition promises to bring stability, growth, and sustainability to South Africa’s energy landscape, marking a significant milestone in the country’s journey towards energy self-sufficiency and resilience.

Retailers within the PetroCONNECT Alumni network have shared various perspectives and concerns regarding the acquisition: 

“There is uncertainty among retailers about whether this acquisition will affect fuel prices. Given that South Africa still needs to import crude oil, the impact on prices remains a key question.” — Sfiso Madolo bp Modderfontein.  

“I am hopeful that the CEF's operation of the refinery could lead to job creation, providing employment opportunities for those currently unemployed.” — Mangalisa Koboka -Readiness Programme Alumnus