Johannesburg - The Competition Tribunal said on Friday it has approved with conditions a deal by Chinese state-owned oil company Sinopec to acquire a 75% stake in Chevron South Africa.

The transaction is a single largest acquisition of a South African-based firm by a Chinese company.

It is subject to production and job retention commitments, with Sinopec expected to establish its headquarters in South Africa and invest R6 billion in upgrading Chevron’s refinery in Cape Town.

The Tribunal said Sinopec recognised South Africa as an “ideal strategic hub for developing its midstream and downstream operations on the African continent”.

It ruled Chevron South Africa, which operates about 850 petrol stations and a lubricant blending plant in Durban, would not cut jobs as a result of the deal. 

"Sinopec will spend approximately R290m to cover the cost of rebranding the 227 service stations falling under Chevron SA’s branded marketer footprint that have been upgraded to the latest Caltex standards, as well as cover the rebranding costs to the Sinopec brand for approximately 353 sites in the three large metropolitan areas outside the branded marketer areas," the tribunal said. 

Sinopec was bidding against Glencore to acquire the Chevron assets.

The company said its goal was to “upgrade Chevron South Africa’s operations in line with the standards of Sinopec’s other refining operations and to expand the refinery capacity in South Africa over time”.

Refinery production was expected to increase from the current 75% rate to 90%.

Sinopec also committed to “promote the export and sale of South African manufactured products for sale in China” and eliminate bottlenecks.

* Sign up to Fin24's top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER