PETROSA’s proposed crude oil refinery will meet a 200000-barrels-per-day shortfall of refined petroleum products by 2020, PetroSA CEO Nosizwe Nokwe said yesterday.
Ms Nokwe said PetroSA was progressing with preparations for the refinery, to be based at Coega port, near Port Elizabeth. The project would see the national oil company play a bigger role in the local petroleum industry. In terms of its growth strategy, PetroSA wants to supply about 25% of SA’s fuel needs by 2020.
In its motivation for the project, PetroSA has said the refinery would boost SA’s security of fuel supply and reduce the country’s reliance on imports.
Ms Nokwe yesterday said SA last year imported about 120000 barrels per day. “That is the size of a refinery,” she said.
But the project has attracted criticism. Former BP Southern African CEO Sipho Maseko has said that SA did not need the project, saying it should import refined petroleum products in case of a shortfall. In an article last year, consultant Jeremy Wakeford said the project would be an unaffordable “white elephant “.
In the project’s defence, Ms Nokwe pointed to last year’s imports. She said these were likely to grow leading up to 2020. The project would meet the deficit for finished products.
“If there is excess (products from the refinery), that can be exported (into Southern Africa). If demand exceeds the 200000, we can always increase the size of the plant,” she said.
She said that the move to cleaner fuels would require an upgrading of existing refineries.
“A lot of the refineries are old. That will require a lot of investment. Chances are that (oil) companies will find it difficult to spend a lot of money on them.” A recent study showed a decrease in investments in local refineries.
Ms Nokwe said PetroSA was searching for potential equity partners in the project. “We want partners who will be able to bring in technology,” she said.
The potential partners should also facilitate PetroSA’s access to crude oil. She would not say how much percentage PetroSA was prepared to give up on the project. But she said that the company wanted to retain “a percentage enough to give us sufficient decision-making” influence.
In May, PetroSA signed a “joint study agreement” with China Petrochemical Corporation. The agreement entails a commissioning of studies over two phases. The first phase, will, among others, look at the refinery’s size and configuration.
The second phase would culminate in a final investment decision on the project. The refinery, also known as Project Mthombo, is to come on stream in 2020.
PetroSA’s strategy will also see it enter the downstream market which entails the sale and distribution of petroleum products.
Ms Nokwe said the company would consider buying existing petroleum outlets “if opportunities arise”. PetroSA would pursue new projects as part of a partnership, she said.
PetroSA spokesman Kaizer Nyatsumba said in the pursuit of the 25% share of the liquid fuels market, “no option is excluded”.
Article source: http://www.businessday.co.za/articles/Content.aspx?id=176214