Chevron SA in limbo amid talk of pull out
Local group remains mum as parent firm ponders its future
CHEVRON South Africa remains tight-lipped about what its parent company, Chevron Global Energy’s decision will be on the local company’s future and whether or not the firm will be pulling out of the country.
Chevron Global Energy is a wholly owned subsidiary of New York Stock Exchange-listed company Chevron Corporation.
Chevron Corporation, the world’s second largest integrated energy company, markets its products under the Caltex brand, one of the country’s top petroleum brands, with around 850 service stations nationwide.
Chevron SA operates a crude oil refinery in Cape Town with a production capacity of around 100 000 barrels a day.
The refinery produces petrol, diesel, jet fuel, liquefied gas and other products which are exported throughout Africa.
Last month, Chevron released a statement announcing that in line with its strategic portfolio review, Chevron has made a decision to solicit expressions of interest for the company’s 75 percent shareholding in Chevron SA, as part of a three-year asset sales programme announced in 2014.
Chevron’s president for international products, Mark Nelson, said: “This demonstrates Chevron’s continuing focus on balancing our global portfolio with our long-term business priorities, and it is aligned with our previously announced $15 billion divestment programme.”
Chevron’s headquarters in San Ramon, California, said the firm reported a loss of $588m for last year’s fourth quarter, compared with earnings of $3.5 billion in 2014’s fourth quarter.
Chevron said foreign currency effects increased earnings in the 2015 quarter by $46m, compared with an increase of $432m a year earlier. This was mainly due to a year-on-year decline in crude oil prices.
However, Janine Myburgh, the chief executive of the Cape Chamber of Commerce and Industry, said Chevron’s problems “are just the tip of the iceberg”.
She said the low oil price has put a great deal of pressure on all of South Africa’s refineries struggling with low margins.
“We must also remember that the refineries are old and small by modern standards so they are no longer very efficient.
“It is now cheaper to import refined fuel from countries like India than to buy the crude oil and do the refining here.
“We have also had breakdowns as you would expect in old plants.”
She said there could well be an Eskom-type crisis in the liquid fuels industry and there was a need to know more about what was really going on.
“We know that the Petro SA plant in Mossel Bay is in trouble and what happened to plans to build a huge new refinery near Port Elizabeth to process imported crude oil from Venezuela.”
Myburgh added that Venezuela had had a change of government and was in a state of crisis partly as a result in the collapse of their oil revenue.
“In any case we no longer have money to build a new refinery and the expensive pipeline that would be needed to convey fuel to the main market in Gauteng.
“With our weak rand and our present credit rating, borrowing is out of the question.”
She said the oil industry had always been opaque and it was time to put the cards on the table and make an assessment of the real situation.
“There are things that need to be done, and the sooner we start the better.”