December 11, 2014 [Bloomberg] - South Africa’s energy regulator gave a company controlled by Vitol Group and Malaysia’s MISC Group (MISC) approval to build a fuel-storage facility in Cape Town, where Chevron Corp. (CVX) runs an oil refinery.
Burgan Cape Terminals Ltd.’s plant is “intended to improve the challenges of security of fuel supply” in the Western Cape region, the company said in an e-mailed statement today. Burgan is 70 percent owned by terminal operator VTTI BV, a venture between energy trader Vitol and shipping company MISC, which is controlled by Petroliam Nasional Bhd.
South Africa, which has 53 million people, doesn’t produce enough fuel to meet demand from motorists, forcing shipments from refineries elsewhere. Chevron, whose refinery accounts for almost a quarter of the country’s oil-processing capacity, is against an increase in imports, saying last month this would undermine the profitability of its 110,000 barrel-a-day plant, first commissioned in 1966.
The Chevron plant will continue to be supported by oil companies, Burgan Chief Executive Officer Muziwandile Mseleku said in the statement. Domestic fuel is cheaper than both imports and coastal supplies and local refineries are protected by law, ensuring local energy is used before imports are approved, he said.
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Transnet Holdings SOC Ltd., South Africa’s state-owned ports and rail operator, awarded Burgan the tender to develop the facility “to address ongoing fuel shortages in the Western Cape,” Burgan said in the statement.
The province’s department of environment and development planning is conducting an environmental-impact assessment of Burgan’s facility. The plant will cost $61 million to build and include 118,000 cubic meters of storage and a jetty to accept mid-range tankers.
Chevron is opposing the study, Burgan said. Chevron spokeswoman Suzanne Pullinger didn’t respond to a phone message seeking comment.
Chevron is engaging in “exclusionary conduct,” Burgan said in the statement. It will file a complaint with South Africa’s Competition Commission by the end of the week, Mseleku said.
In 2012, South Africa imported 110,000 barrels a day of petroleum products, according to the U.S. Energy Information Administration. State-owned PetroSA is planning the 300,000-barrel-a-day Mthombo refinery to meet future demand.
Petronas holds 80 percent of Engen Petroleum Ltd., South Africa’s biggest fuel retailer.
