After a hundred years of doing business in the South African market, petroleum giant BP Southern Africa is planning to expand its network of service stations around the country and revamp its more than 500 forecourt stores.
BP Southern Africa (BPSA) spokesperson Hamlet Morule said the company’s main focus will shift to improving the look and feel of its service centres and the expansion of its forecourt convenience store network.
“Firstly, [our focus] is really [on] redefining our convenience business, and in that I mean as you understand these days, the service station of today is not one of the 1950s where you had two pumps and two nozzles. It is a different type of business now and you view it as a one-stop centre.
We are looking at existing land banks in areas where there is development. We are also looking at high-volume motorways. When you look at the main national roads, our competitors are players there and we have a lesser competitive edge in those motorways and highways.
— Hamlet Morule, BP Southern Africa spokesperson
“We are looking at our offerings and appealing to our clients. We are ensuring that a service station becomes your way home. We continuously review our convenience offering and look to improve it,” he said.
BPSA intends to roll out several new sites during 2024, with 10 sites now in development, followed by another 11 in 2025. Between R20m and R25m will be invested to build the new service stations, with the final price tag dependent on the size of the site and its location.
The company already has more than 500 stations nationally and is now pursuing sites primarily on South Africa’s major highways, as well as in high-growth urban nodes.
Morule said BPSA was looking at developing a high-grade portfolio, looking at sites where they do not yet have a high presence. This would include developing service stations in areas where BP did not previously have them.
“We are looking at existing land banks in areas where there is development. We are also looking at high-volume motorways. When you look at the main national roads, our competitors are players there and we have a lesser competitive edge in those motorways and highways.”
Morule’s remarks come as another petroleum giant in the local market, Shell, announced that it would be preparing to sell its downstream interests in South Africa and non-binding offers for sale and purchase agreements coming in June.
Asked if BPSA was in talks with Shell about its non-binding offers for its downstream business assets, including 500 services stations and forecourts, Morule said: “The answer for now is no. It is a straightforward no. There are no discussions.”
He said the company’s supply operating model needed to be tweaked as BPSA is relying heavily on imports of crude after flooding damaged Durban’s refinery. BPSA needed to ensure survival and security of supply for itself and the country, he said.
“The model that we used previously relied partially on refining crude to finished product locally. As you would be aware, our refining plant has not been operational since 2022 due to damage incurred from flooding in Durban. We needed to move into a different operating model where we rely on imports 100%.
“Given our reliance on imports, we need to make sure that we strengthen the partnerships that we have to ensure that our security of supply is guaranteed. That goes with ensuring that the cost of bringing diesel is looked at very closely so that we are able to bring in pricing that is conducive for the end user.”
He said BPSA’s partnership with its forecourt partners remained strong. The forecourt facilities of BPSA include partners such as retail giant Pick n Pay and the Wild Bean Café.
“We are still in that partnership with Pick n Pay. Our partners are still very, very valid as we speak. We have the Wild Bean Café in our service stations. That’s really a BP-associated branding, not only in South Africa. That is there to stay. Castrol, as an entity owned by BP Global, continues to be our lubricant and oil supplier.”
Old Mutual investment strategist Izak Odendaal said the exit of Shell suggests that the South African energy and petroleum market is a tough industry to be in.
“This might have more to do with the dynamics in the sector than issues around the South African economy, though of course things like load-shedding and crime make running a petrol station particularly difficult here.”
However, he said he did not believe that Shell’s exit from the South Africa would change the domestic competitive landscape as someone else would likely buy the company’s assets and continue running the petrol stations.
“As for refining, our refineries are all old and need refurbishment to comply with modern clean fuel regulations. They are all small in a global context, and it might not be financially viable to run going forward.”
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