Petronas, Sasol, Engen, Worldwide and Tshwarisano Sign Agreements to Create Liquid Fuels Business

Source: www.gulfoilandgas.com 11/2/2004, Location: Africa

Petronas International Corporation Limited (PICL), a wholly-owned subsidiary of Malaysia's state oil company Petroliam Nasional Berhad ("Petronas"), has signed definitive agreements with South Africa's listed energy and chemical company, Sasol Limited ("Sasol"), Worldwide African Investment Holdings (Pty) Limited ("Worldwide') (through its wholly owned subsidiary Afric Energy Resources (Pty) Limited ("AER")) and a Sasol black economic empowerment ("BEE") entity, Tshwarisano LFB Investment (Pty) Limited ("Tshwarisano") to combine Sasol's Liquid Fuels Business ("Sasol LFB") and Engen Limited and its subsidiaries ("Engen") in a new liquid fuels joint venture, Uhambo Oil Limited ("Uhambo"). Uhambo means "a journey" in both IsiXhosa and IsiZulu.

Transaction Details
Sasol, Petronas, AER, Tshwarisano and Engen have signed a share-for-share exchange agreement, which regulates the steps involved in forming this joint venture. This agreement has been concluded in addition to a shareholders' agreement regulating the relationship between the joint venture's shareholders. A Component Supply Agreement ("CSA") between Sasol Synfuels (Pty) Limited ("Sasol Synfuels", a Sasol subsidiary) and Sasol Oil (Pty) Limited ("Sasol Oil") has been updated and a brand licence agreement regulating the use of Sasol brands has also been agreed between Sasol, Uhambo and PICL.

In addition, an intellectual property agreement regulating the terms and conditions of the transfer of technology and the right to use intellectual property currently held by Sasol Technology ("Sastech", a subsidiary of Sasol) has also been agreed between Sasol Synfuels, Sastech, Uhambo and PICL.

Sasol and Petronas have emphasised that the transaction's completion is subject primarily to the approval of competition authorities in South Africa and the European Union. It is expected that these conditions will be fulfilled during the first half of 2005.

Uhambo Oil Limited
Subject to official sanctioning it is expected that Uhambo will be the leading South African liquid fuels refining, marketing and distribution business, with a capacity to produce more than 13-million cubic metres of petrol, diesel and kerosene a year.

Uhambo will comprise the Enref oil refinery at Durban, Sasol's share in the Natref crude oil refinery at Sasolburg in the northern Free State and about 1 600 retail service stations in South Africa, as well as liquid fuel operations in 13 other sub-Saharan African countries. It will also include liquid fuels components produced at the blending facility at Secunda from synthetic fuel (synfuel) components. These synfuel components will be procured from Sasol Synfuels through the CSA.

It is estimated that the joint venture will have a market share of about 33% in South Africa for white petroleum products – mostly gasoline, kerosene, jet fuel and diesel. Uhambo will be looking to sell about 60% of its output directly into its own marketing network and a minimum of 25% to other oil companies with the remaining volumes initially destined for the export market. Uhambo will be the leading liquid fuels retail marketing business in South Africa with a presence in all nine provinces.

The retail network in South Africa will include more than 1 250 Engen service stations and about 350 Sasol, Exel and Zenex service stations, including Engen Quickshop and Sasol Delight convenience shops. After closing, the shareholders have agreed to fast track the roll out of Sasol-branded convenience centres around South Africa in order to achieve an overall number of 250 as soon as possible.

The joint venture's head office will be located in Cape Town. Uhambo will maintain regional service offices, fuel depots and production facilities at Cape Town, Durban, Sasolburg, Secunda and Johannesbu??????


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