Independent oil group Puma Energy – which has made rapid progress in expanding its African footprint over the past ten years, primarily through the acquisition of assets from oil majors over the last three years – indicates that it continues to eye prospects in South Africa, particularly as the country’s imports of final fuel products grows.
The group, whose identity arises as a result of the company’s historical ties to Argentina, operates in the midstream and downstream sectors in 15 African countries and 35 countries globally.
Its African presence was materially bolstered in 2010 when it acquired BP’s downstream operations in Namibia, Botswana, Zambia, Malawi and Tanzania for $296-million. In 2011, it bought Chevron’s fuel marketing businesses in Namibia.
It currently has a portfolio of 320 branded service stations in seven African countries, as well as 600 000 m3 of storage facilities in several countries. It employs 2 500 people across the continent and offers wholesale and specialist services for resources, construction, shipping and aviation customers.
Globally the group, which recorded sales of $13-billion in 2013, employs 6 000 people, has storage terminals with a combined capacity of 4.5-million cubic metres, 1 500 services stations and 3 000 direct business customers. Africa represents between 30% and 40% of group turnover, with the balance spread across Central and South America, parts of Europe, Asia and Australia.
Puma Energy has no upstream activities and CFO Denis Chazarain says it has no intention of pursuing upstream prospects in Africa, or elsewhere.
Instead, its African and international expansion is geared towards growth markets where there is a shortage of infrastructure to service that expansion. It will also seek to take advantage of the midstream and downstream opportunities that arise as the oil majors concentrate increasingly on their upstream businesses and on renewing their reserves, Chazarain explains.
COO for Africa Christophe Zyde reports that, although Johannesburg is the group’s regional headquarters, it initially had no specific business aspirations in the country, which is dominated by the majors and has relatively developed liquids-fuels infrastructure.
“Five years ago, South Africa would not have met our criteria [for investment]. But the picture has changed. South Africa has become a major importer of clean products, last year importing more than 4-million tons, which eventually could open the door for somebody else to import fuel products,” Zyde explains.
However, a key constraint relates to the availability of land to build import infrastructure that is within close proximity to the upgraded fuel pipeline, linking Durban to Johannesburg.
Nevertheless, Zyde believes there will be a steady growth in imports as South Africa’s installed refinery base ages and as the upgrades required for the production of cleaner-fuels specifications are implemented. As the market evolves from one that was previously self-supporting into one that is increasingly reliant on imports, South Africa will become “more attractive” for groups such as Puma Energy.
The company will also consider any acquisition opportunities that could arise as the majors restructure their portfolios and is, therefore, monitoring the possible sale by Petronas of its 80% interest in Engen – it has been widely reported, though, that State-owned oil group PetroSA is close to finalising an acquisition of that interest.