Shell And BP To Fund South Africa's Sapref Restart As Government Takes Over: Report

The units of Shell plc SHEL and BP p.l.c. (BP) in South Africa are reportedly expected to pay about $15 million to the state-run Central Energy Fund for operational costs at the Sapref refinery, which they are selling to the government.

The Central Energy Fund (CEF) is seeking National Treasury’s approval to purchase the flood-damaged refinery, with a nameplate capacity of 180,000 barrels per day, from Shell and BP for just 1 rand ($0.0539), reported Reuters.

The deal includes fixed assets and transmission pipelines located in the east coast petrochemical hub of Durban.

The report added that the payments could help revive South Africa’s largest refinery as the government seeks to secure petroleum supplies amid declining refining capacity.

CEF confirmed the allocation for operational expenses and potential severance packages for the first year of operations but did not specify the amounts.

The report cited CEF board chairperson Ayanda Noah, who stated that discussions with the National Treasury are ongoing and that CEF is seeking “affordable capital” to help revive Sapref.

As per the report, a May letter from energy minister Gwede Mantashe to the finance ministry indicates that Shell Downstream SA and bpSA will pay a total of 286 million rand ($15.42 million) for operational costs in the first year, expected to be 2025, following the deal’s finalization. This amount includes 260 million rand plus a 10% contingency of 26 million rand.

As per the report, in the letter, Mantashe noted that the refinery currently generates about 34 million rand in annual revenue. The energy department confirmed the letter’s authenticity to Reuters but did not provide additional details.

This week, BP and Abu Dhabi National Oil Co (ADNOC) reportedly met with Cypriot Energy Ministry officials on Friday to discuss potential investments in Cyprus’ emerging natural gas sector.

Price Action: SHEL shares are up 0.53% at $70.09, while BP was down 0.06% at $32.92 premarket at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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