petrosa plans to build a mega refinery in south africa

PetroSA Plans to Build a Mega Refinery in South Africa

05-27-2008

PetroSA, South African oil company announced that the coega refinery project will have a capacity of 400,000 barrels a day, rather than the previously proposed 250,000 bpd. The cost of the project is $11 billion and the board has already approved this increase in capacity after evaluating the conclusions of a recently completed pre-feasibilty study undertaken by a leading U.S. based refinery engineering company, KBR.

By 2014, when the refinery is due to be commissioned, South Africa will already be experiencing a shortfall of locally-refined product of about 200 000kbpd.

This will be due to its projected economic growth and low investment in existing refineries.

This shortfall will be met by importing product - an expensive solution that has a major impact on foreign exchange and increases potential supply vulnerability.

PetroSA's original base case of a 250kbpd crude refinery on the east coast of South Africa proved robustly attractive to meet the country's medium term fuel growth requirements.

However, acknowledging the National Oil Company's mandated role to reduce external dependency in national energy security requirements, combined with input from potential international partners who recognise the flexibility of Coega to supply diverse markets and mitigate risk, the Board of PetroSA has approved expanding the planned refining capacity to 400kbpd.

"A recently-completed logistics study has confirmed that crude supply in 'VLCCs' [very large crude carriers] via a SPM [Single Point Mooring] is technically and operationally feasible, and PetroSA now awaits the outcome of an environmental and engineering analysis to determine the most suitable location for the facility," said PetroSA Vice-President of New Venture: Midstream, Joern Falbe.

The positioning of this highly competitive, world-class mega refinery will help to diversify crude and product supply structures in South Africa by providing an essential strategic supply alternative to the country's main inland markets.

A future product pipeline from Coega to Gauteng, commercially viable, becomes a justifiable reality in the medium term.