S Africa's Sasol and Petronas unit Engen in merger talks

JOHANNESBURG (CNI)--South African chemicals firms Sasol and Engen, a unit of Malaysia’s Petronas, said Friday they were in talks to merge their liquid fuels businesses in Southern Africa.

The move could create a dominant South African chemicals producer.

Engen spokeswoman Barbara Manson told CNI that Engen Chemicals had a 42 to 44% share of South Africa’s chemicals market but was unable to give a production figure. Sasol accounts for the remainder of the domestic market.

The chemicals activities of Engen are based on its 150 000 barrels a day (bbl/d) refinery in Durban which contains Africa’s only BTX (benzene, toluene, xylenes) plant, a de-aromatised solvents facility, a white spirit plant and a process oil plant, according to the Cape Town-based firm.

Engen Chemicals (formerly Aktol Chemicals) also operates as part of Engen’s lube and special product unit and is ExxonMobil Chemical’s appointed southern African distributor for fluids, intermediates, polymers and resins.

Sasol Chemicals Industries, the biggest chemicals firm in the country is grouped around its olefins and surfactants, polymers, solvents and nitrogen units, marketing over 200 products. Annual production of chemicals from its South African operations reached around 4.4m tonne last year, of which approximately 2.5m tonne was supplied to the local market, according to analysts.

Engen's Manson said that any deal would also have to be approved by the country's competition authorities.

A merger would see Sasol add Engen’s oil refining capacity to its existing 150 000 bbl/d oil-from-coal plant at Secunda and its 105 000 bbl/d majority-owned Natref oil refinery in Sasolburg which accounts for some 40% of local fuel demand.