China Petroleum and Chemical (Sinopec) has agreed to acquire 75% stake in Chevron’s South African assets and its subsidiary in Botswana for nearly $1bn.
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With this transaction, Sinopec acquires the first major refinery in Africa, reported Reuters.
Under the deal, the acquired assets include a 100,000 barrel-per-day capacity oil refinery located in Cape Town and a lubricants plant in Durban, along with 820 petrol stations.
The acquisition also includes storage tanks and oil depot distribution facilities.
It is reported that according to South African regulations, the remaining 25% stake of the assets will be owned by a group of local shareholders.
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By GlobalDataChevron Global Energy noted in a statement that Sinopec's bid was selected for better terms and conditions.
The completion of this transaction is subject to approval by regulatory authorities.
The latest move is part of Sinopec's aim to expand its footprint in international markets.
It is reported that the demand for refined petroleum is increasing in South Africa, witnessing nearly a 5% annual growth for the last five years, which encouraged Sinopec to execute the deal.
In 2012, Sinopec and South Africa's national oil company PetroSA have partnered to construct a refinery, which was later shelved due to rising costs.
Sinopec is expected to retain the whole workforce and Chevron’s Caltex brand for up to six years until it introduces a rebranding strategy.
In the last five years, the Chinese firm has invested more than $6bn in the downstream business across multiple countries, reported Bloombergquint.
As a part of its divestment programme, Chevron had put its South African business up for sale in 2014.
Image: Sinopec Headquarters in Beijing. Photo: courtesy of WhisperToMe.
