Total South Africa is looking to grow both its lubricants and retail fuel business as well as restart the offshore oil exploration that it put on hold in 2014, CEO Pierre-Yves Sachet said after a visit to its bulk fuel and lubricant plants in Durban.
He said that a R70-million investment in its lubricant plant at Island View within the Durban port precinct over the past year was intended to improve both quality and efficiencies ahead of expected growth in this key aspect of its business locally.
Lubricants account for between 10% and 20% of its business in South Africa in value terms.
Total is completing the laboratory at its Island View lubricants plant. This follows significant automation of a plant that produces upwards of four-million litres of oil a month.
This is sold locally via Total’s retail arm, as well as via other businesses. It is also exported into Africa, mainly within the Southern African Development Community region but also as far afield as Madagascar.
Sachet said that, in addition to investing in the plant, Total had also invested in its people and processes, reorganising business channels within each of its business segments. The end result was a lubricants plant that is world class and compares with its operations in other countries in the world with similar facilities.
He said that, overall, Total was focusing on three main areas of development – lubricants; business-to-business sales of fuel, which includes general trade and sales to resellers and the mining industry; and expanding its retail footprint through opening at least 20 new service stations in South Africa during 2018.
Total currently has a 15% market share of the retail fuel industry in South Africa and is investing to maintain or even grow its share in a rapidly expanding market.
“Being one of the strong leaders in this market is a reasonable goal,” Sachet commented.
He pointed out that the company plans to increase its 550 station network to 800 stations within the next five years through organic growth, partnerships and acquisitions.
Total South Africa is currently best represented in Gauteng, the Cape and the North West and, although it will continue to invest in these high-growth areas, he said the plan was to develop a more representative national footprint.
At the same time, he said Total would be installing solar panels at more than 60 fuel stations by the end of this year. “We want to complete the entire network within the next five years as part of the group ‘s worldwide strategy.”
With alternative energy, and solar in particular, a priority investment area for the group, Sachet added that Total was watching the developments around the signing of agreements with independent power producers and, in particular negotiations regarding rounds 4a and 4b of the Renewable Energy Independent Power Producer Procurement Programme, with interest.
“We are part of round 4c and hope to be awarded some new projects. We currently operate three solar farms in the Karoo. Our goal as a responsible major is to increase our footprint in solar production in the country,” he said.
Similarly, he said Total was watching developments in liquefied natural gas (LNG) and particularly projects in Richards Bay and Coega, with “a lot of interest”. As the number two player in the global LNG space, Total sees investment potential in this area.
Sachet also confirmed that Total would relaunch its oil exploration campaign and resume drilling at its deep-water well by the first quarter of 2019.
Total operates offshore block 11B/12B which is 175 km off the South African coast with water depths ranging from 200 m to 1 800 m.
It also holds a cooperation permit in the South Outeniqua Block.
Total put oil exploration on hold in 2014 due to technical difficulties with strong currents. This and the low crude oil price has seen a number of competitors, including Royal Dutch Shell, abandon oil exploration off South Africa.
“We are pioneers in exploring deep offshore waters in South Africa. We did not finish what we had started and our colleagues from geoscience believe there is potential. We have also developed technology to do this that our competitors have not,” he said.