Line Petroleum, UK firm ink US$210m agreement
LOCAL firm, Line Petroleum, has concluded a US$210 million (€200m) partnership agreement with United Kingdom based SJ Global Oil Trading, which has operations across the world including Dubai, for investments in three key sectors, including energy.
Directors of Line Petroleum are currently in Dubai, United Arab Emirates, to consummate and operationalise the agreement and kickstart implementation of the multi-million dollar deal.
In a letter of invitation, dated June 17, 2022, SJ Glokal Oil Trading, a unit of SJ Global Investments, chairman Peter Samuel said his company invited directors of Line Petroleum their offices in Dubai to consummate the agreement with Line Petroleum.
He said the scheduled meetings to conclude and start implementation of the agreement signed in 2021 would also see Line Petroleum directors meeting with various Government agencies and bankers.
The agreement entails fuel imports for distribution in Zimbabwe and several countries in the region, which has already commenced amid revelations vessels have already set sail towards Beira in Mozambique.
Line Petroleum enjoys a fuel storage capacity of 50 million litres. However, it also distributes a range of products that include automotive and industrial lubricants, greases, cleaners and degreasers and bitumen.
A total of €52 million (US$64,5 million) has since been released to immediately kickstart the implementation of the agreements with the Zimbabwean entity, which were first signed in April 2021.
In line with President Mnangagwa’s Zimbabwe is Open for Business mantra, which encourages investments across sectors, the deal also entails investments in mining and manufacturing.
The deal is also testimony to the success of the Second Republic’s global reengagement drive and thawing relations between Zimbabwe and the west, which maintained sanctions against Harare for nearly two decades, derailing many potential multi-million dollar investment projects.
Notably, like many countries globally, Zimbabwe is suffering the full impact of reduced and uncertain global supply and the agreement on fuel imports will help stabilise supply and prices in the country, but also in the region.
This comes as global oil supply could struggle to keep up with demand going forward, as a resurgent Chinese economy comes while major global exporter Russia continues to battle western sanctions over its military operation in Ukraine, the International Energy Agency warned.
Line Petroleum operations director Alistair Carl King said his company, a subsidiary of Unlimited Africa holdings, signed the joint venture agreement with SJ Global Investments of the UK at the height of the Covid-19 pandemic in April 2021.
Mr King said he was excited about the partnership with SJ Global, stressing all was now in place including the immediate implementation of the offtake agreement and related logistics.
“The signing and the arrangement covers a number of areas, including importation of fuel, mining and manufacturing. This year, directors of Line Petroleum and Unlimited Africa Holdings have been invited to Dubai, United Arab Emirates to consummate and kickstart the deal of importing fuel and funding all projects to the tune of up to 200 million pounds (US$244,4 million).
“An (initial) disbursement of €52 million (US$54,6 million) has been made. The signing arrangement went on well and we will be working together as a joint venture, which is in line with the Second Republic policy of inviting investors into Zimbabwe.
“So, this project is starting immediately with vessels leaving Dubai, going to Beira for pumping into (Feruka pipeline and distribution in) the region because the product that is coming will be covering the whole region; DRC, Zambia, Botswana, Malawi and Zimbabwe, among others” he said.
Mr King said SJ Global Oil Trading, with an asset value of US$169 billion, was primed to become the biggest private equity partner in Africa by the end of this year in terms of the money that it handles.
The company has a presence across Africa and recently extended its tentacles to Zimbabwe through Unlimited Africa Holdings, which also controls Line Petroleum, Line Products and Services and Unlimited Exploration.”SJ Global has a subsidiary (SJ Glokal) that deals in fuel in Dubai, United Arab Emirates and that is how Line Petroleum has joined in, through SJ Glokal Oil Trading,” he said.
“In the joint venture, SJ Global is mainly involved in the financing and acquisition of materials and products since it is rightly positioned in the capitals of the world; it is headquartered in London, United Kingdom, and has offices all over the globe with presence in about 32 countries.
“Their foothold and their representative in Africa become Unlimited Africa Holdings, which is a Zimbabwe based and owned company,” he said.
Mr King said the agreement with SJ Global could not have come at a better time given the market is “bleeding” due to the war in Eastern Europe, which has caused erratic supplies.
He said his company hoped to tap into the opportunity, which would ensure stability of supply of fuel in Zimbabwe and the rest of the SADC region where the fuel will also be marketed.
The company’s finance director Mr Paul De Haast, who is in Beira Mozambique to receive the fuel consignment from Dubai, said he was excited by the prospects of the potential spin offs from the deal to Zimbabwe, the region and his company.