Petronas calls off deal with PetroSA

Petronas owned a 30 stake in Engen in 1996. It increased its holdings to 100 in 1998 but sold 20 of it to private equity firm Pembani Group. – AFP

PETALING JAYA: Petroliam Nasional Bhd (Petronas) is said to have called off its divestment of Engen Petroleum to PetroSA.

According to reports, South Africa’s national oil company, PetroSA used to sit on a cash pile of 11 billion rand (RM3.37bil) in 2009 but its coffer had halved to five billion rand (RM1.53bil).

Engen is South Africa’s biggest fuel retailer and Petronas has an 80% stake in it, worth some 18 billion rand (RM5.52bil). Johannesburg-based private equity firm Pembani Group Ltd holds the remainder.

PetroSA confirmed receiving Petronas’ letter calling off the deal but Petronas has yet to respond to StarBiz’s queries at press time.

PetroSA corporate affairs vice-president Zama Luthuli was quoted as saying: “I can confirm that our CEO, Nosizwe Nokwe-Macamo, received a letter dated Dec 17, 2014 from Petronas.

“The matter will be dealt with at the next PetroSA board meeting before the end of January.”

The parties were said to have set November as the deadline to complete the transaction.

PetroSA could transform into a major downstream player with an extensive distribution network from a primary fuel supplier had the deal gone through.

It was reported that PetroSA was mulling to buy the Engen stake in 2013.

Petronas owned a 30% stake in Engen in 1996. It increased its holdings to 100% in 1998 but sold 20% of it to private equity firm Pembani Group.

According to the South African Petroleum Industry Association, South Africa’s oil industry recorded sales of 267 billion rand in 2011.

Engen has a presence in more than 20 countries. It exports refined petroleum products to over 30 countries, mainly in Africa, and the Indian Ocean islands.

Its refinery in Durban, South Africa has a capacity of 135,000 barrels per day.

It was also reported that Petronas had plans to rationalise some projects as well as to dispose of certain assets in Africa that had limited growth prospects.

Due to the plunge in oil prices, the national oil major’s top executives indicated that it would sell off less productive oil and gas assets and focus on the profitable ones to ensure sustainable earnings stream.