PetroSA in tie-up to build a new refinery by 2014
October 22, 2006
By Stewart Bailey
Johannesburg - South Africa's state-owned oil and gas company PetroSA and a "private sector partner" would by 2014 build a new coal- or gas-to-motor fuel refinery to cut the country's reliance on imports, a government official said.
A team of cabinet ministers would within two months oversee a study to determine the refinery's size and location, said Nhlanhla Gumede, the deputy director of hydrocarbons at the department of minerals and energy. Construction would begin by 2009, he added.
"In respect of energy security, it will be important for the state to have some level of control," Gumede said on Friday.
"We must reduce our reliance on imports."
South Africa needs a new refinery that produces 150 000 barrels a day to meet local demand in five years if the government reaches its target of boosting economic growth to 6 percent by 2010, according to Sasol, the world's biggest producer of motor fuel from coal.
South Africa might need to import diesel from next year, Gumede said in August.
PetroSA, which has a gas-to-motor fuel refinery on the southeast coast, accounted for only 7 percent of the country's transport fuel requirements, Gumede said.
The government wanted to increase the state-owned company's share of the market to help secure energy supplies, he said. While the energy ministry held talks over a refinery with Sasol, which supplies about 40 percent of South Africa's fuel, PetroSA's partner had not been decided on, Gumede said. Other companies had shown interest in investing in the plant, he added, without naming them.
The government favoured a so-called synthetic fuels refinery to make better use of the country's own energy reserves and reduce reliance on crude oil, most of which was imported from Saudi Arabia and Iran, Gumede said.
The study will weigh the benefits of the refinery against a traditional crude oil plant. It would determine whether to build the refinery near the Waterberg coal deposits near Gauteng, which was short of refined fuel, Gumede said.
"In most people's thinking, an inland refinery makes a lot of sense," he explained.
"A new coal-based refinery would also provide an opportunity for other industries to develop in the region."
South Africa will have a shortfall of 2.4 billion litres of petrol by 2012. It will also fall short of 2.27 billion litres of diesel and 70 million litres of kerosene, according to the SA Petroleum Industry Association. - Bloomberg
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