November 11, 2019 [Reuters] – South Africa’s Central Energy Fund (CEF), partnering with Saudi Aramco, expects a proposed new 300,000 barrel per day crude oil refinery along South Africa’s east coast to come onstream by 2028, making it the region’s largest refinery, CEF’s acting group chief executive said on Thursday.
Work on the project is still at an early stage, but indications are that it would cost in the region of $10 billion, said Kholly Zono, adding this cost excluded the development of a related petrochemical complex at Richards Bay.
Former Saudi Energy Minister Khalid al-Falih announced the project in January, ahead of plans by Saudi Aramco, the world’s biggest oil firm, to list its shares.
“We are comfortable we have a very solid business case to attract investment and funding from bankers,” Zono told Reuters on the sidelines of an oil and gas conference in Cape Town.
“This refinery will not only increase capacity for South Africa but also the region,” he said, adding it would be funded through a mix of debt and equity.
A pre-feasibility study will be completed in the next few weeks, after which a more detailed feasibility study will firm up the design and capital cost estimates, followed by front-end engineering and design.
“We are looking at the refinery becoming operational by 2027/28.” Zono said.
The new refinery would reduce the need for refined product imports and cement Saudi Arabia’s dominant position in South Africa’s oil sector. The Gulf kingdom already supplies around 40 percent of the crude oil consumed in South Africa, which is a net importer of petroleum products.
The refinery will be designed to accept other types of crude and produce fuel compliant with South Africa’s impending clean fuels regulations based on Euro V specifications, Zono said.
South Africa has talked about building a new refinery for more than a decade, but has struggled to find investors.
Africa’s most industrialised economy has six refineries, four using crude oil and two synthetic fuel as feedstock. Royal Dutch Shell, BP, Total and Sasol are among the major refinery operators.
Zono said the new refinery will not jeopardise the Mossel Bay gas-to-liquid (GTL) refinery operated by CEF’s subsidiary PetroSA, amid fears the plant could be shuttered.
South Africa’s national oil company, PetroSA, said in September its flagship GTL refinery could run out of domestic supplies by the end of 2020.
“The refinery in Mossel Bay will continue to operate and there is no intention to close it down,” said Zono.
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