Oil trading giants and the national oil companies of some of the Middle East’s biggest oil producers are racing to buy Shell’s South African gas stations in a bid to expand their access to downstream assets, according to Oilprice.
The world’s largest oil company and oil exporter Saudi Aramco, Abu Dhabi’s national oil company ADNOC, Oman’s OQ Trading and international trading giant Trafigura are interested in buying Shell’s gas stations in South Africa, sources with knowledge of the matter told Bloomberg this week.
Shell said earlier this year it would divest its downstream operations in South Africa as a result of an internal portfolio review.
Shell holds a majority stake in Shell Downstream SA (SDSA), which was formed by the merger agreement between Shell South Africa and Thebe Investment Corporation a decade ago.
Shell will retain its upstream assets and even plans to drill ultra-deepwater wells off the coast of South Africa, seeking to expand recent discoveries in Namibia to the west coast of South Africa.
However, Shell is reshaping its global downstream portfolio and South African assets are up for sale.
Trafigura is already present in Africa with its Puma Energy fuel distribution unit.
Engen, which owns South Africa’s largest chain of petrol stations, was sold last year to Vivo Energy, a subsidiary of the world’s largest independent oil trader, Vitol Group.
Trafigura and Sasol were also competing to buy Engen, but Vitol won the race.
Trafigura, Vitol and other large independent traders are buying refineries and detail network assets that the biggest international oil and gas producers are divesting as part of strategic portfolio realignment.
In this way, commodity traders gain direct access to a refinery to which they can ship some of the crude oil they sell, and they become larger participants in the crude oil futures and options market to hedge their exposure to physical crude oil.
In recent months, the world’s largest independent oil trading companies have acquired several refineries from major oil companies around the world in consortiums with other companies.
Glencore has also joined the ranks of major oil traders buying refineries from Big Oil. In May, Shell reached an agreement to sell its refining and chemicals assets in Singapore to CAPGC Pte. Ltd., a joint venture between Chandra Asri Capital Pte. Ltd. and Glencore Asian Holdings Pte. Ltd.
The commodities trading industry currently has the means to strategically reinvest in long-term trades and strategic decisions, according to consultancy Oliver Wyman. A move to reinvest profits downstream would give traders greater optionality and influence over the commodities they trade.
In turn, state-owned oil companies in the Middle East are buying more downstream assets abroad to supply crude oil to refineries or sell their refined oil products to gas stations.
Saudi Aramco, for example, continues to look for acquisition opportunities in downstream and LNG, a senior executive told Reuters in an interview. In recent months, Aramco has struck several deals in refining and petrochemicals in China and LNG in the United States and Australia.
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2024-09-09 08:25:17