A revised Petroleum Pipelines Bill put to the relevant National Assembly committee on Monday provides for guaranteed protection of crude oil supplies to the Natref oil refinery in Sasolburg.
This was confirmed by Minerals and Energy department deputy director-general of hydrocarbons and energy planning, Dr Rod Crompton, at a briefing on the Bill to the Minerals and Energy Portfolio committee.
Crompton said the Bill, in its terms of conditions of licence applying to pipelines, said that a licensee may be licensed for their crude oil or petroleum products “provided that sufficient pipeline capacity is reserved for crude oil to enable the uninterrupted operation of the crude oil refinery located at Sasolburg to operate at its normal operating capacity at the commence of this Act for so long as that refinery continues as a going concern”.
Explaining this afterwards, he said the history of the issue was that investors in the 1970s had wanted to invest in that refinery and build it at Richard’s Bay on the coast.
This had been the wish of Total and the (then) Shah of Iran — through the Iranian National Oil Company. The government of the day — the then National Party government — had requested them to relocate that refinery “from Richard’s Bay to Sasolburg … as we understand that the investors agreed to do that under certain conditions”.
These apparently included preferential tariffs.
The Natref refinery is supplied with about 105 000 barrels of oil a day of a total supply in the country of nearly 700 000 barrels a day and, from the point of view of government, served the industrial heartland of the country, Crompton explained.
“Whatever arrangement the new regulator (the Petroleum Pipelines Regulatory Authority set up in terms of the Bill) makes in terms of pipeline use, sufficient space should be left in the pipeline system to provide sufficient crude for that refiner,” he said, in explaining the intention of the Bill.
Crompton noted that Total, Sasol and a black empowerment group, Tosaco, currently owned the refinery. Commenting on the past preferential tariff provided to Natref, he noted that this matter would be up to the new regulator. “At the last hearing we pointed out that in respect of a special tariff for an inland refinery … there is no proven case before government to warrant that “
“Once the law commences the regulator will start work and the regulator would have to investigate the tariffs (structure).”
Natref is South Africa’s only inland crude oil refinery — and thus competes against other industry players — and is dependent on the state-owned 670km pipeline from Durban to Sasolburg. Other players, such as Shell, BP and Engen, have refineries at the coast. – I-Net Bridge