Engen is on course to take advantage of projected growth in African base stock demands after completing its purchase of Chevron assets.
Engen, South Africa's largest fuel retailer, now owns retail sites, lubricant plants, fuel stations and storage facilities in Zambia, Malawi and Reunion. The assets were previously part of Chevron's downstream operations.
The acquistion is part of Engen's declared "Epic 2016" strategy to become one of the largest operators in Sub-Saharan Africa. The new assets will provide signficant additional bulk storage and warehousing facilities, particularly in North Zambia which will provide the company with a supply route to southern Congo.
Engen is one of a number of operators in the region that could benefit from, and stimulate, growth in demand for base oil supplier as predicted in the latest Kline report. The document, entitled “Lubricant Basestocks in Africa and the Middle East 2010: Market Analysis and Opportunities” claims potential growth in base stock demand for both regions of 2.5% per year to 2019.
While Africa's growth rate is lower than that of the Middle East, automotive lubricants will be the main driver of demand, particularly with the modernisation of many African fleets. Blending volumes of 3.5m tons has created a market of around 63,000b/d of base stock across the whole region. Although more than 85% still comprises API Group I product, the report shows an increasing demand from Group II and III product as new vehicles take to the roads.