Engen acquisition by Vitol to boost SA oil refineries by R100 billion

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Trade, Industry and Competition Minister Ebrahim Patel says South African oil refineries will benefit to the tune of R100 billion over the next five years as a result of the acquisition of Engen by global oil player Vitol.

Patel was addressing the media in Parliament during the signing ceremony of the public interest commitment to the deal.

Described as a significant occasion contributing to addressing inequalities, deepening localisation and boosting growth and economic production.

Engen is one of the largest fuel distributors in the country, with more than a thousand service stations nationally.

Video: Engen-Vitol deal signed in Parliament: Ebrahim Patel

Job security 

The oil company has been acquired by Vivo Energy, a subsidiary of Vitol, which is a major global player in oil. The deal has conditions that include security of jobs and local procurement.

“Engen will continue to buy fuel that is refined in South Africa from Aestron refinery in Milnerton in Cape Town for a period of 15 years and from Sasol refinery in Secunda and the Sasolburg one for a period of up to 10 years and this commitment has been estimated to be worth about R100 billion in petroleum turnover over the next five years,” says Minister Patel.

The parties involved signed the public interest conditions agreed to between Vivo, the Department and Engen. Engen will not change its name as a result of the acquisition.

“We believe that the energy sector in South Africa is extremely bright and only by working together with the private sector and the government we will be able to unlock those opportunities. So, for us, this is a continuation of a start of a long-term presence here in South Africa and we are very excited about the future,” says Harvey Foster from Vitol group.

Patel also addresses Shell’s recent announcement that it will exit the country.

“These things happen. They will enter markets they will exit markets. The same with Vitol. They will enter markets and exit markets and had it not been for this heightened atmosphere we have at the end of an administration, this probably would have passed no more than the news that Engen was due to be sold. We didn’t have the same degree of able gazing and concern.”

The deal will also see an increase in the stake of the BEE partner, as well as 20 additional service stations being owned by black South Africans.

Patel says this is a clear signal of investor confidence in the country.