Though state-owned Chinese petroleum company Sinopec has signed a purchase agreement with Chevron Global Energy Inc to acquire the US company’s 75% stake in Chevron South Africa – which includes a refinery in Cape Town, a lubricants plant in Durban and a 100% holding in Chevron Botswana – the deal may be in jeopardy.

According to a recent report by business journalist Donwald Pressly – who has long followed developments surrounding the $900-million (about R12,2-billion) sale – one of the original bidders, global commodities producer Glencore, has indicated that it intends to match or beat Sinopec’s offer.

Writing in the Cape Messenger, Pressly says: “Though Sinopec emerged as the successful bidder earlier this year, it is understood that Glencore – one of the original bidders along with Total and Gunvor – is exercising its pre-emptive right to match or beat the Chinese offer.

“There will be a lot of snot en trane in political circles if the company snatches the deal – believed to be in the region of $1-billion, a wee bit more than the $900-million coughed up by the Chinese.”

Chevron announced in January 2016 that it planned to sell it’s holding in its South African business unit – which markets petroleum products under the Caltex, Delo and Havoline brand names – and, in March this year, followed up by saying Sinopec’s offer had been accepted, subject to regulatory approval.

In a statement released at the time, a spokesman for the Chinese company said the acquired assets included the five-million tons-a-year refinery, the lubricants plant, as well as more than 820 petrol stations, 220 convenience stores and other oil storage and distribution facilities across South Africa and Botswana.

The statement added that, in accordance with South African regulations, the remaining 25% stake in Chevron South Africa would continue to be held by local shareholders, among them the South African National Taxi Council and an employee’s trust. It said the purchase agreement had been filed with the Chinese government, which owns Sinopec’s holding company, China Petroleum & Chemical Corporation.

“With stable economic development, South Africa and Botswana have development potential in petrochemical industries. The demand in South Africa for refined petroleum has increased by nearly five percent annually over the past five years, to a current total of about 27-million tons,” the statement said.

According to Pressly, if Sinopec is pushed out there will be political fallout. “It is clear that the South African political establishment favours the sale with Sinopec,” he says.

In response to questions regarding Glencore’s alleged renewal of interest, Braden Reddall, a spokesman for Chevron’s downstream operations, told Pressly that the company was subject to a confidentiality agreement and, therefore, could not comment on the matter.

If the Sinopec deal goes ahead, it will represent the Chinese company’s first investment in an oil refinery in Africa, though it has been active on the continent for more than 20 years, mainly in oil and gas exploration. In 2012 it partnered with PetroSA on a feasibility study for a proposed refinery at Coega, called Project Mthombo, which was never built.