Industry Trend Analysis - Glencore Seeking Further Downstream Exposure - DEC 2017


BMI View: The acquisition of Chevron's South African Downstream business represents further opportunity for Glencore to grow its fuels distribution business, creating more vertically integrated operations that help mitigate narrowing trading margins. Similarly, consolidating its position in Africa will help target emerging fuels demand in the region.

Following the break-down in a previous deal between Sinopec and Chevron for the acquisition of Chevron's downstream assets in South Africa (see ' Sinopec Move A Strategic Fit ' , March 20), Glencore has agreed with Off The Shelf Investments Fifty Six (OTS), a black economic empowerment group, to acquire a 75% interest in Chevron South Africa, as well as a 100% interest in Chevron Botswana, for an aggregate consideration of USD973mn. This follows OTS exercising a pre-exemption right to the Sinopec move earlier in the year, and subsequently re-opening the bidding process to appropriate funding.

Glencore Diversifying Downstream, Playing Catch-Up

Traders Targeting Emerging Demand
Selected Regions: Refined Fuel Consumption, 000b/d
f = BMI forecast. Source: BMI/EIA

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