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Friday, April 24, 2009

South Africa & America: Virtually No Black-Oil Ownership

Blacks in South African and Blacks in the United States do not own oil or any of its infrastructure. Nigerian born Houston offshore oil developer Kase Lowell is about the lone exception. Experts estimate that Black-owned oil companies collectively hold under 4% of the South African oil market. Although blacks are involved in some retail sales of fuel oil in residential markets, they are completely missing in the $700 billion in annual imports of crude oil.

South Africa's white-dominated oil industry vigorously opposed the formation and participation of more black oil companies when the country was addressing deregulation at the turn of the century. At the retail level in South Africa, Black oil companies increased their share of the SA petrol market from about 4% to 8% of the SA diesel market. The National Black Fuel Retailers Association (NABFRA) says entry is still difficult for black companies. NABFRA feels that before the industry moves into free-market thinking through deregulation, there needs to be an established black presence in the marketplace. Black empowerment groups asked at the time for a brake to be put on deregulation until they have at least 20% to 25% market share. SA's black oil companies are Afric Oil, Exel, Tepco and Zenex.

South Africa's top oil companies include Engen, with an average market share of 25%, Shell 19%, Caltex 17.5% and BP 16.5%. Worldwide Africa Investments, which owns two of SA's four black oil companies, negotiated with Malaysian state-owned oil company Petronas to acquire a minimum 30% share of Engen and to consolidate its interests within Engen. Petronas increased its stake in Engen to 90% in 1998, leading to the buyout of the remaining minorities and the delisting of Engen. Worldwide has a 50% stake in Zenex and a majority stake in Afric Oil, giving it control of about 200 of the country's service stations. This broke new ground for black oil companies in SA, which up to now have been confined to the retail sector of the industry, while established major companies - mostly multinationals - have dominated refining, wholesaling, retailing and exploration. Petronas, the Malaysian owner of local petroleum products retailer Engen, is searching for a black economic empowerment partner to increase black ownership in Engen from 20% to 25% (Business Day, April 7, 2009)

In 2003, the first oil company in which the major shareholders are all black women was formed in South Africa. This is a sector that has been dominated by white males as far back as anyone can remember. The Sanoco Oil Company, a fully fledged independent downstream petroleum firm is also one of the first successes of the new empowerment charter that seeks to give black and other disadvantaged groups real control of the major pillars of the country's economy. (African Business, 2003)

A possible fast track: black-owned oil companies should be given access to oil refining - and the government-controlled refining margin - without having to go the long route of actually owning refining assets. They should simply import crude oil and reach a processing agreement with an existing refiner. (Business Times)

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