http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.92Change: 0.01
R/$ = 12.69Change: -0.03
Au 1093.17 $/ozChange: -2.01
Pt 979.00 $/ozChange: -3.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Mar 06, 2012

BP economist questions economic logic of new SA refinery

Back
BP chief economist Christof Ruehl questioning the economic logic of South Africa’s plan to build a new crude oil refinery. Camera Work: Nicholas Boyd. Editing: Darlene Creamer.
 
 
 
DURBAN|Johannesburg|Africa|BP|BP Southern Africa|Building|Diesel|Environment|Gas|PetroSA|PROJECT|Road|Shell|Africa|China|South Africa|Sapref Refinery|Crude Oil Refinery|Energy|Natural Gas Liquids|Oil|Product|Eastern Cape|Christof Ruehl|Gerard Derbesy|Infrastructure|Eastern Cape|BIOFUELS|Diesel
|Africa|Building|Diesel|Environment|Gas|PROJECT|Road|Shell|Africa|||Energy|||Infrastructure||
durban|johannesburg|africa-company|bp|bp-southern-africa|building|diesel-company|environment|gas|petrosa|project|road|shell|africa|china|south-africa|sapref-refinery|crude-oil-refinery-industry-term|energy|natural-gas-liquids|oil|product|eastern-cape|christof-ruehl|gerard-derbesy|infrastructure|eastern-cape-province-or-state|biofuels|diesel
© Reuse this



BP chief economist Christof Ruehl has questioned the economic logic of South Africa’s plan to build a new crude oil refinery, saying that such a development would go against two key global trends: the prevailing surplus of refining capacity and the expansion of the international trade in liquid fuels.

South Africa’s national oil company PetroSA has proposed the development of a R200-billion, 360 000 bl/d refinery, dubbed Project Mthombo, for development in the Eastern Cape. However, it emerged recently that a feasibility study is under way for a smaller-sized refinery.

In light of recent inland stock shortages, the Department of Energy (DoE) had also initiated an audit of South Africa’s refineries to determine the “real status” of their production capacities and capabilities.

The audit would inform a 20-year infrastructure road map, which would be completed by year-end. This document would determine the need for expansion programmes, including the need for Mthombo.

The DoE indicated that the plan would encourage investment, as well as a move towards cleaner fuels. In the absence of significant new investment in local refining capacity, it had been calculated that South Africa would be importing about 8.5-billion litres of fuel a year, or 150 000 bbl/d, by 2015.

But speaking in Johannesburg during a visit to South Africa, Ruehl said global refinery throughputs were likely to grow only modestly over the coming 20 years, notwithstanding BP’s projection that liquid fuels consumption would expand by 16-million barrels a day, to 103-million barrels a day, by 2030

Refinery demand would, in BPs view, expand by only 9-million barrels a day over the coming 20 years, constrained by the growth in fuels that did not require refining, such as biofuels and nonrefined natural gas liquids. In addition, existing spare capacity would accommodate some of the future growth in refinery throughput, while China’s stated strategy of refined product self-sufficiency could curtail increases for refiners outside of China.

In such a context, Ruehl questioned the advisability of pursuing a new refinery investment in South Africa, which could result in South African taxpayers subsidising consumers elsewhere.

“If you have a new refinery in the current environment and it is not fully utilised, as it is likely to be, you have to either join the forces of the market which would say, ‘close the thing’ . . . or you get into a situation . . . where you need government support to keep it open,” he argued.

In the South African context, a new refinery would probably need to fill a growing demand for diesel, but the refinery would produce both petrol and diesel, which could result in a surplus of petrol. “If you do that with subsidies, which is suspiciously how it looks, then those who buy it somewhere else would thank you . . . at the expense of the South African taxpayer.

The focus of policymakers should rather be on understanding what infrastructure backlogs and bottlenecks existed to prevent the surplus of refined product available globally from reaching the South African market.

“The international global trends fly right in the face of building a refinery right now. Then you have to ask whether there are any exceptional reasons for South Africa to build it – the generation of employment, development of the region, or being completely cut off from rest of the world. In my view, as far as I can see, the answer is it doesn’t make sense from an economic perspective.”

But BP Southern Africa CEO Gerard Derbesy insisted that the global group remained committed to investing in South Africa. It was particularly committed to upgrading its terminals, as well as modernising the Sapref refinery, in line with South Africa’s cleaner-fuels requirements. BP and Shell jointly own Sapref, which is based in Durban.

The introduction of new fuel standards could require the country’s top refineries to invest up to $4-billion in upgrading their plants.
 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Infrastructure News
Embattled South African steel producer ArcelorMittal South Africa (AMSA) has offered insight into the “fair pricing model” it has tabled before government in return for tariff protection and a government stipulation that locally manufactured steel be designated for...
POWER POTENTIAL Central Africa has significant hydropower potential to meet both its local and export requirements
The forecast increase in demand for electrical energy in the sub-Sahara Africa region has prompted heads of States to endorse an investigation of the 15 most promising hydropower projects, worth an estimated $50-billion, says black-owned engineering consulting firm...
More
 
 
Latest News
Embattled South African steel producer ArcelorMittal South Africa (AMSA) has offered insight into the “fair pricing model” it has tabled before government in return for tariff protection and a government stipulation that locally manufactured steel be designated for...
Telecommunications group Telkom on Friday said it had posted a 1.7% uptick in net revenue for the three months to June 30, on the back of a strong performance by mobile on data revenue and higher fixed-line subscription revenue. Mobile net revenue for the first three...
Dangote Cement revised its 2015 spending plans to $1-billion from the $700-million estimated nine months ago after it commissioned two new African plants this June, Nigeria's biggest listed company said on Friday. The company, majority owned by billionaire Aliko...
More
 
 
Recent Research Reports
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Electricity 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Road and Rail 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
Daimler truck test engineer Dirk Stranz pushes one button, and then retracts his hands from the steering wheel of the Mercedes-Benz Future Truck 2025. “And now the truck is driving itself.”
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
ARMANDÉ KRUGER Balancing the collection and processing of data must be aligned to strategy
Many complementary services enable companies to derive broad value from data inside and outside them. The complexity of data management means that companies’ strategies determine the various data systems and functions they will use, says PBT Group regional sales...
The South African Civil Aviation Authority (SACAA) has announced that it had awarded the country’s first remotely piloted aircraft systems (RPAS) pilot’s licence. It was issued on Friday, July 10, to SACAA employee and qualified commercial pilot Nicole Swart,...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96