Oct 22, 2012
SA should take ‘proactive’ steps to deal with refined-fuel deficitBack
DURBAN|Johannesburg|Port|Africa|Botswana|Consulting|Gas|India|Industrial|Namibia|Oil-and-gas|Petroleum|PetroSA|PFC Energy|PROJECT|Refining|SECURITY|Africa|Europe|Kenya|Lesotho|Nigeria|Senegal|South Africa|Swaziland|ZAR|Crude-oil Refinery Project|Energy|Logistics|Oil|Oil And Gas|Oil And Gas Industry|Oil Product Pipeline|Product|Eastern Cape|Infrastructure|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
Creamer Media Editor
To subscribe email firstname.lastname@example.org or click here
To advertise email email@example.com or click here
Other Energy News
Recent Research Reports
Construction 2016: A review of South Africa's construction industry (PDF Report)
Creamer Media’s Construction 2016 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; key participants; local demand; geographic diversification; corporate activity; black economic...
Energy Roundup – February 2016 (PDF Report)
The February 2016 roundup covers activities across South Africa for December 2015 and January 2016 and includes details of a Government Gazette notice that confirms Cabinet’s decision to move ahead with the 9 600 MW nuclear procurement programme; State-owned power...
Energy Roundup - December 2015 (PDF Report)
The December 2015 roundup includes details of State-owned utility Eskom’s application to claw back R22.8-billion; South Africa’s ranking as an investment destination for renewable energy; and a nuclear expert’s thoughts on reactor designs for South Africa’s nuclear...
Water 2015: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2015 Report considers the aforementioned issues, not only in the South African context but also in the African and global context in terms of supply and demand, water stress and insecurity, and access to water and sanitation, besides others.
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
This Week's Magazine
Lifting, transporting, installing and ballasting solutions provider Ale has expanded its global fleet of trailers and invested in the latest range of widening trailers that can be mechanically widened from 3 m to the desired width for any project. Ale ordered 48 axle...
The market for the BMW 7 Series in South Africa differs quite significantly from the rest of the world. China, the US and the Middle East almost exclusively buy the long-wheel-base version, using the German manufacturer’s luxury high-end sedan as a chaffeur-driven...
January new-vehicle sales fell by 6.9%, to 48 615 units, compared with the same month last year. Statistics released by the Department of Trade and Industry show that the domestic new passenger-car market declined by 6.1%, to 34 936 units, compared with 12 months ago.
Information technology (IT) equipment and infrastructure multinational Dell is providing open infrastructure systems for clients so that they can use any systems, including innovative new systems, that suit their business needs, says Dell Europe, Middle East and...
South Africa’s State-owned defence industrial group, Denel, has set up another international partnership, based in Hong Kong. This new subsidiary is Denel Asia and it is a joint venture (JV) with South African private sector company VR Laser.