France’s oil major Total SA (NYSE:TOT), mining and trading giant Glencore, and crude oil trader Gunvor have bid to buy 75 percent of Chevron’s (NYSE:CVX) South African downstream business estimated to be worth US$1 billion, Reuters reported on Tuesday, quoting three industry sources.
In January of this year, Chevron said it was mulling over selling its 75 percent of its South African business, including a 110,000-bpd refinery in Cape Town, as part of a multi-billion-dollar divestment plan announced in 2014. Chevron operates in South Africa via Chevron South Africa (Pty) Limited, in which it has 75 percent, while a consortium of Black Economic Empowerment shareholders and an employee trust own the other 25 percent.
According to Reuters sources, the second bidding round for Chevron’s South African downstream business ended on September 30. The selling price is put at US$1 billion for the business in South Africa and neighboring Botswana.
Total, Glencore and Gunvor are some of the frontrunners for the bid.
“We might possibly get a (preferred bidder) decision by the first quarter of next year,” one source said, as quoted by Reuters.
Chevron, on the other hand, said in an email to Reuters via spokesman Braden Reddall that the bidding was still ongoing, and that the company’s policy is not to announce details of “commercial activities”.
In June of this year, South Africa’s state-held Strategic Fuel Fund (SFF) expressed interest in Chevron’s local business.
It’s not only downstream businesses that the U.S. major is seeking to offload. In a bid to raise cash with the oil price rout, Chevron is also poised to divest upstream assets in Asia worth US$5 billion.
However, the U.S. company’s strategy is not only about selling assets. Chevron approved in July a US$37-billion expansion of the Tengiz oilfield in Kazakhstan, which it operates in consortium with ExxonMobil (NYSE:XOM) and Russia’s Lukoil. Plans are to bolster production to 39 million tons of crude per year, or 850,000 barrels per day, by 2022.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…