National oil company (NOC) PetroSA on Thursday defended its plans to build the 400 000-bl/d project Mthombo crude oil refinery, at Coega, in the Eastern Cape, saying this would “be in the best interest” of South Africa.

This followed on petroleum group BP Africa’s call on the government, last week, to proceed with caution before approving the construction of the $9-billion to $11-billion greenfield refinery.

BP had called for a review of other supply-side options, including the expansion of existing refineries, as it felt that the project might not be in the best interest of taxpayers and which it warned could cost more than expected.

PetroSA president and CEO Sipho Mkhize highlighted in a statement on Thursday that the crude oil refinery was “totally in line” with government’s Energy Security Master Plan, as well as with the recently announced second Industrial Policy Action Plan, which was aimed at expanding production in value-added sectors by replacing imports, as well as at creating jobs.

“Although, clearly, the refinery will be commercially competitive, it addresses several of South Africa’s pressing needs that are just not considered by BP,” said Mkhize, adding that thousands of new jobs would be created, while the Eastern Cape region would also experience some economic upliftment.

Further, the refinery’s development would be a catalyst for clean fuels in the country and would play a major role in the transformation of the oil industry, he said.

Mkhize emphasises that PetroSA understood why some international oil companies (IOCs) would not want the refinery to be built, as this would mean that the company would remain “increasingly reliant” on imported product.

It would also mean that profits generated in the regulated South African market was not reinvested, to any major extent, in the country, which was “clearly not in South Africa’s best interest”, he added.

The Department of Energy’s (DoE’s) deputy director general of hydrocarbons and energy planning Tseliso Maqubela on Wednesday told delegates at an energy conference that the country would not wait until it was completely at the mercy of oil imports before taking a decision on building a new crude oil refinery.

“Project Mthombo’s development has been an open, transparent and inclusive initiative during which PetroSA has, on numerous occasions publicly invited the local IOCs to participate in the venture. A few have shown interest in this invitation that includes exploring synergies between Mthombo and the existing local refineries,” said Mkhize.

Meanwhile, PetroSA highlighted that the greenfield project was now ready to proceed into the front-end engineering design (FEED) phase, which would take a further 15 months and which would include several key decision “gates”, during which progress and developments would be rigorously reexamined.

Once the FEED phase was completed, a recommendation would be made for the final investment decision, which PetroSA expected to be made in early 2012.