Cape Town, South Africa – Oil giants Shell and BP will contribute approximately $15 million towards the operational costs of South Africa’s Sapref refinery, which they are selling to the state for a symbolic one rand.
The deal, aimed at securing the country’s fuel supply amid declining refining capacity, involves the transfer of the flood-damaged refinery and its associated assets to the Central Energy Fund (CEF).
A letter from Energy Minister Gwede Mantashe to the finance ministry revealed that Shell and BP will cover operational expenses for the first year of CEF ownership, estimated at around $15.42 million. This comes as the refinery currently generates minimal revenue of about $3.4 million annually.
While the CEF is in the process of securing funds to revive the 180,000-barrel-per-day refinery, a senior energy official has indicated that the rebuild cost is unlikely to exceed $1 billion.
The sale comes as both Shell and BP have been scaling back refining operations globally in response to increased competition and environmental concerns. Sapref itself has been idle since 2022 following flood damage.
The CEF, which is seeking government approval for the purchase, has confirmed the provision for operational costs and potential severance packages.
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