PetroSA Said to Consider Buying Petronas’ Stake in Engen

PetroSA, South Africa’s state-owned oil company, is considering buying the controlling stake in Engen, the country’s biggest fuel retailer, now held by Malaysia’s government, according to two people with knowledge of an announcement made to Engen staff.

Petroliam Nasional Bhd., Malaysia’s state oil company known as Petronas, holds 80 percent of Engen with Pembani Group Ltd., a private equity firm based in Johannesburg, owning the rest. South Africa’s oil industry had sales of 267 billion rand ($27 billion) in 2011, according to the South African Petroleum Industry Association.

PetroSA, which is based in Cape Town, will conduct a due diligence process that will take three to six months before a decision on the acquisition is made, the people said, citing Datuk Ahmad Nizam Salleh, Engen’s CEO, who addressed staff on July 15 .

“PetroSA has over the last couple of years indicated a willingness to look for downstream opportunities,” the company said in an e-mailed response to questions yesterday. “To fulfill this objective, we have over this period been engaged in a series of negotiations with various potential partners,” it said, without commenting further.

African Reach

PetroSA operates a 45,000 barrel-per-day natural gas-fuel refinery at Mossel Bay on the country’s south west coast and is planning to build a new crude oil refinery near Port Elizabeth in the Eastern Cape province.

Engen operates in more than 20 African countries and has a 135,000-barrel-a-day refinery and lubricating oils blending plant in the eastern South African city of Durban, according to the company’s website. It mostly sells fuel in South Africa and elsewhere in Africa through 1,500 gas stations

Tania Landsberg, a spokeswoman for Engen, declined to comment.

Gaining access to Engen’s infrastructure and retail footprint will be a major addition for PetroSA, energy analyst at Cape Town-based Frost & Sullivan Inc., Cornelis van der Waal, said by phone.

“There will be a lot of value for PetroSA to do the deal,” Van der Waal said.

In 1998 Petronas took control of Engen by buying shares in the company and then offering $465 million for the stock it didn’t already own. It later sold a stake in the company to a precursor of Pembani.

To contact the reporters on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net; Andre Janse van Vuuren in Johannesburg at ajansevanvuu@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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