Oct 22, 2012
SA should take ‘proactive’ steps to deal with refined-fuel deficitBack
DURBAN|Johannesburg|PetroSA|PFC Energy|Africa|Europe|Botswana|India|Kenya|Lesotho|Namibia|Nigeria|Senegal|South Africa|Swaziland|ZAR|Crude-oil Refinery Project|Oil|Oil And Gas Industry|Oil Product Pipeline|Eastern Cape|Marc Seris|Eastern Cape|Middle East|Southern Africa
© Reuse this
PFC Energy is a global consulting firm specialising in the oil and gas industry and is currently an adviser to South Africa’s national oil company PetroSA, which is promoting the concept of a new domestic refinery.
Speaking in Johannesburg, Seris said demand in the Botswana, Lesotho, Namibia, Swaziland and South Africa (BLNS-RSA) supply zone could gradually increase to about 870 000 bl/d by 2030.
Such growth could weigh on South Africa’s external balance of payments, with imports arising mainly from the Middle East, India and Europe. Increased reliance on imports from outside the region could also expose consumers to greater risk of supply disruptions.
Seris argued that Southern Africa had the market potential to support a new large-scale refinery, or an expansion of existing facilities.
The statement came amid an increasingly assertive move by PetroSA to market the development of Project Mthombo, a crude-oil refinery project earmarked for development in the Coega industrial development zone, in the Eastern Cape.
The State-owned company believes the multibillion-rand 360 000 bbl/d project would contribute to the security of liquid-fuels supplies in the Southern African Development Community and usher in a cleaner-fuels era for the region. However, there is currently no distribution infrastructure linking Coega to the main hinterland markets.
“An oil product pipeline from the refinery to the Gauteng region would provide an alternative route to main demand market and would ensure supply reliability,” Seris argued.
He added that, even with the introduction of the first train, in 2020, and the second by 2025, the project would be insufficient to erase the anticipated regional product shortfall.
“A 360 000 bl/d refinery in Coega would create a short-lived surplus of middle-distillates – the BLNS-RSA region would remain short in gasoline … under this scenario, demand in the BLNS-RSA supply zone would outstrip supply from the middle of the 2020 to 2030 decade.”
Seris indicated that refinery owners in South Africa currently lacked an appetite for refining investments, but suggested that the country could further alleviate its oil product deficit by debottlenecking its existing logistics and integrating its supply chain internationally.
South Africa’s domestic refining industry was currently in a vulnerable state, as most refineries were old and lacked flexibility, while the Port of Durban was congested.
“With upcoming change in fuel specs, government needs to decide which of these options is the better route,” he argued, adding that the existing refineries required material investment to reduce operational costs and improve reliability.
Other refineries in the sub-Saharan African region also lacked scale and complexity.
The country’s fuel sector would also require significant investments to meet the emerging Clean Fuels 2 specification, with the South African Petroleum Industry Association estimating a need for industry-wide investments of about R35-billion to R40-billion.
“Getting South Africa supplied with large volumes of 10 ppm [parts per million] motor fuels could be problematic, because only a few refineries outside of Europe can make these specifications,” Seris pointed out.
Between 2004 and 2012, major oil and gas companies have been stampeding out of Africa, today only remaining in the Southern African region and Nigeria.
Seris explained that this was owing to oil companies having downsized their downstream portfolios, reducing their exposure to refining and exiting nonstrategic regions or countries.
“These stakes in African refineries have all be purchased by State interests, except for Kenya, Côte d'Ivoire and Senegal,” he noted.
He said renewed government participation in the oil and gas sector reflected rising energy nationalism.
“Moving forward, African national oil companies will gradually gain more operational and strategic autonomy from the State to make higher-level decisions."
Edited by: Terence Creamer© Reuse this Comment Guidelines
Updated 7 hours ago The African Development Bank’s (AfDB’s) board of directors on Wednesday approved a $20-million trade finance line of credit to be provided to housing and habitat company Shelter Afrique (SHAF) to boost the availability of trade finance instruments to small and...
Updated 7 hours ago South African construction group Murray & Roberts (M&R) on Wednesday said the proposed acquisition of the outstanding shares in Australian company Clough had been implemented, making Clough a wholly owned subsidiary of the group. M&R, which previously already held a...
Recent Research Reports
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
Mitsubishi Motors South Africa (MMSA) has introduced a 4x2 derivative of its Pajero Sport sports-utility vehicle (SUV), which will give it access to a substantial slice of the full-size SUV market, where it will compete with the likes of the Ford Everest, Chevrolet...
South African Energy Minister Ben Martins has affirmed that the government wants the country to be globally competitive in the nuclear sector. "Our responsibility has always been ... to ensure that, in nuclear energy, South Africa can compete with the rest of the...
Mercedes-Benz South Africa (MBSA) president and CEO Dr Martin Zimmermann describes the new S-Class as “a special place to be”, with the car creating a sense of “wellness” once you are seated inside the German brand’s flagship model. It is difficult to argue...
Water scarcity and water-quality issues are broadly recognised and understood in most political, business and civil organisations in South Africa, but solving water issues will require wide and continuous action in catchments and municipalities by organisations and...
Work is well under way on the R212-million Imvutshane dam, 30 km north-west of Stanger, in KwaZulu-Natal, which is a key link in supplying people in rural Maphumulo with a reliable source of safe drinking water.