Petronas in Talks to Sell S. Africa’s Biggest Fuel Retailer

Petroliam Nasional Bhd. began talks with potential buyers for Engen Petroleum Ltd., South Africa’s biggest fuel retailer, as labor disputes flare in the country and the Malaysian state oil producer boosts domestic operations.

“Petronas is currently in preliminary discussion with interested parties,” said Azman Ibrahim, a spokesman in Kuala Lumpur for Petronas, as the state company is known. He didn’t name the potential buyers in an e-mailed reply to queries.

Petronas holds 80 percent of Cape Town-based Engen.

PetroSA, South Africa’s state oil company, is considering buying the Engen stake, two people with knowledge of the matter, said July 16. Engen’s staff were given the details in an address by Chief Executive Officer Ahmad Nizam Salleh on July 15, said the people, declining to be identified as the talks are private.

PetroSA, based in Cape Town, is seeking to enter the retail market, Thabo Kgogo, vice-president of operations, said today in South Africa’s Mossel Bay. “We’re still exploring potential partners,” he told reporters, declining to identify candidates. A labor union at Engen said it supported a deal with PetroSA.

By taking control of the retailer, PetroSA would be able to sell directly to consumers in more than 20 African countries, mostly through Engen’s 1,500 filling stations. Engen also has a 135,000-barrel-a-day refinery and a lubricating-oils blending plant in Durban, its website shows. The refinery, which opened in 1954, suffered a labor strike over pay and a fire in 2011.

Integrated Oil

“We support the development of an integrated state owned oil company that advances job creation, decent work and fuel security for the country and the region,” the Chemical Energy Paper Printing Wood & Allied Workers Union, affiliated to the ruling ANC party’s labour federation ally Cosatu, said today.

PetroSA operates a 45,000-barrel-a-day gas-to-fuel refinery at Mossel Bay on the southwest coast and plans a new crude-oil refinery near Port Elizabeth in the Eastern Cape province.

Petronas bought Engen in 1998 before selling 20 percent to Pembani Group Ltd., a private-equity firm based in Johannesburg.

Petronas has sold foreign assets such as its stake in U.K. power supplier Centrica Plc and invested more at home to boost local output since Shamsul Azhaar Abbas became CEO in 2010.

A strike by more than 20,000 truck drivers in South Africa left fuel pumps dry last year. A third of gasoline stations in Gauteng province, the commercial hub that uses about 60 percent of all fuel, ran out of at least one of three products, the South African Petroleum Retailers Association said at the time.

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