South Africa Energy Fund Mulls Buying Sapref Refinery

South Africa is considering buying the country’s biggest oil refinery, a joint venture between Royal Dutch Shell Plc and BP Plc, known as Sapref.

The state-owned Central Energy Fund, which manages the country’s energy assets, is looking at acquiring the 180,000-barrel-a-day plant, which is located on the coast near Durban, according to two people familiar with the information. 

The government published new rules in September that require refiners to meet low-sulfur fuel specifications by 2023, which will render most of the fleet obsolete, according to a lobby group representing the fuel manufacturers. Upgrades to process cleaner fuels could be made through green financing, one of the people said.

Shell declined to comment. The company last year said it was reviewing its shareholding in Sapref, which doesn’t factor in to future refinery plans. BP said it has no comment at this stage about potential interest by the CEF, which also declined to comment. South Africa’s energy department didn’t immediately respond to emailed questions.

Some of the nation’s other plants have been shut due to accidents and the Engen oil refinery will be converted into a terminal after suffering annual losses for much of the past decade, the company said in April. PetroSA, which is managed by the CEF, operates a 45,000 barrel-a-day gas-to-liquids plant that was expected to run out of feedstock. 

--With assistance from Laura Hurst.