BP upgrades Durban refinery to meet clean-fuel specs
Sapref is a 50% joint venture with Shell and it is expected that Shell will match BP's investment.
As part of a larger R5-billion investment in BP's refinery, terminal and retail infrastructure, Sapref is being upgraded to meet clean-fuel specifications that government wants implemented by 2017.
"The ability for us to be able to produce more of the region's clean fuels needs locally will have a ... positive impact on BP's ability to contribute towards better security of supply for the region," said Iain Conn, BP's group managing director and chief executive of refining and marketing.
A remuneration mechanism, intended to help oil companies recoup the cost of complying with the new regulations, is set to be published by the department of energy by September this year.
Conn said BP expected the cost-recovery mechanism to be fair, to incentivise further compliance by the rest of the industry; simple, to encourage innovation; and predictable, in order to encourage further investment in the region.
BP said it was not clear how the Sapref upgrade was likely to affect its current output.
The company refused to comment on any potential effects it could have on plans for a proposed new refinery to be built near Port Elizabeth.
State-owned PetroSA has proposed building a 400 000-barrel-a-day oil refinery at Coega, partly to address concerns over ageing refinery infrastructure.
The need for the project, which will cost at least $10-billion, has been questioned as it could risk squeezing out one or more of South Africa's existing fuel refineries.