National oil company PetroSA is to construct a R39-billion crude-oil refinery in Coega near Port Elizabeth, the company announced on Wednesday.
Dubbed Project Mthombo, the proposed crude-oil refinery is expected to produce about 200 000 barrels of fuel a day and will come on stream in 2014/15.
”Project Mthombo will be one of the biggest post-2010 investments in South Africa,” PetroSA CEO Sipho Mkhize said.
It was estimated the project would generate about 1 000 direct jobs during operations and 5 000 to 15 000 during construction.
”This project will also significantly improve South Africa’s fuels-import bill,” Mkhize said.
The project would further redefine South Africa’s energy landscape.
The demand for automotive fuels in Southern Africa already exceeded the local production capacity and South Africa was becoming increasingly dependent on importing refined automotive products.
”Based on the current rate of demand growth, the demand for fuel in South Africa will justify a new crude-oil refinery within the next five to seven years.
”This is why PetroSA is investigating the possibility of building a 200 000-plus barrels per day multibillion-rand crude-oil refinery,” he said.
The Minerals and Energy Department’s energy security master plan recommended that PetroSA procure at least 30% of all crude oil consumed in South Africa.
”The initiative by PetroSA to build a new crude refinery is in direct response to this mandate,” Mkhize said.
Coega was chosen as the site for the proposed new refinery after a thorough and independent screening of five potential locations around South Africa.
Coega offered world-class infrastructure, was ideally located near growing demand centres in the Eastern and Western Cape and had sufficient land available for secondary industries to develop around the refinery.
The industrial zone also provided the strategic flexibility to mitigate the risk to South Africa’s security of supply by reducing reliance on the traditional refinery and import centre, Mkhize said.
Once the technical specifications and commercial aspects of the project had been clarified, the final investment decision would be made around 2010/11.
”PetroSA believes that strong and complementary partnerships will be required to realise a project of this size and nature, to mitigate any project-related risk and to enhance the commercial and financial viability of the project,” Mkhize said.
”These partnerships will be established across the crude refining value chain, from the supply of crude oil, through the erection and operation of the refinery to the distribution and marketing of the automotive products.”
PetroSA was already in discussion with various potential partners to help bring Project Mthombo to fruition, Mkhize said.
PetroSA also operates the world’s first gas-to-liquid refinery at Mossel Bay. — Sapa