A pump is seen at a gas station in Manhattan, New York City
Reuters

Petronas, the national oil corporation of Malaysia, has agreed to sell a 74 percent share in South African oil company Engen to Vivo Energy, a subsidiary of the Dutch-Swiss commodities company Vitol group.

The move will result in the creation of one of the biggest distributors of fuel and lubricants on the continent.

Vivo Energy's acquisition of Engen from Malaysia's national oil company would allow the energy trader to establish a group encompassing 3,900 service stations throughout 27 African nations, according to a joint statement issued by the two companies Thursday.

Furthermore, the merged group will span 27 African countries and have more than 2 billion liters of storage capacity.

Phembani, the second-largest shareholder in Engen and a South African investment company, will continue to have a 21 percent stake in the company.

Currently, regulatory approvals are pending for the acquisition. According to the firms, Morgan Stanley and Rothschild & Co. are Petronas' consultants on the deal, while Rand Merchant Bank and Standard Bank assisted Vivo Energy.

Vivo Energy owns 2,600 service stations across 23 African countries. It does not operate in South Africa but owns service stations under the Engen and Shell brands elsewhere on the continent. Not only that, but Vivo also acquired Engen gas stations in nine African markets four years ago.

"We're looking at downstream opportunities because clearly, it's a good fit with the base business of what Vitol does," Vitol Chief Executive Officer Russell Hardy said in an interview at Engen's headquarters in Cape Town, as reported by Bloomberg.

"Africa being a growth continent and expected to have solid GDP growth and solid transportation growth makes it more of a target as compared to a country that's likely to be full of Teslas in 10 years' time," he added.

Engen, which operates over 1300 service stations in seven different African nations, is the largest gasoline retailer in South Africa. Also, Petronas was considering a sale for some time after first purchasing shares in Engen in 1996 and becoming the company's majority shareholder two years later. The company operates more than 1,300 service stations throughout seven African countries.