Oct 22, 2012
SA should take ‘proactive’ steps to deal with refined-fuel deficitBack
DURBAN|Johannesburg|Port|SECURITY|Africa|Consulting|Industrial|PetroSA|PFC Energy|PROJECT|Security|Africa|Europe|Botswana|India|Kenya|Lesotho|Namibia|Nigeria|Senegal|South Africa|Swaziland|ZAR|Security|Crude-oil Refinery Project|Energy|Logistics|Oil|Oil And Gas|Oil And Gas Industry|Oil Product Pipeline|Product|Security|Eastern Cape|Infrastructure|Marc Seris|Security|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 (150 word limit)
Updated 4 hours ago Despite various challenges related to the extraction of shale oil and gas, as countries grow accustomed to the idea, the use of shale as a form of energy will be more widely pursued, international oil and gas market analyst Michael Lynch said on Tuesday. Speaking at...
Updated 4 hours ago A consortium led by two Kenyan firms won a government tender to build a 1 000-MW, coal-fired power plant, company officials said on Tuesday, part of moves to satisfy rising demand for energy in East Africa's biggest economy. Kenya suffers from regular blackouts due...
Updated 4 hours ago The announcement of the successful bidder for the construction of Durban’s long-awaited passenger cruise terminal was imminent, Transnet National Ports Authority (TNPA) CEO Tau Morwe told delegates at the African Ports Evolution Conference in Durban on Tuesday. ...
Recent Research Reports
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
This Week's Magazine
South African State-owned defence industrial group Denel has announced its fourth consecutive year of profits. The group's results for the financial year 2013/2014 were recently announced at its head office in Centurion, south of Pretoria. Revenues grew by 17%, net...
There is little opportunity for JSE-listed infrastructure company Group Five to grow shareholder value in the domestic market, says CEO Mike Upton. He says value can still be found in the private sector, in the renewable and industrial power sector, as well as in...
The National Association of Automobile Manufacturers of South Africa (Naamsa) has announced the event dates of the 2015 Johannesburg International Motor Show (JIMS). The event will take place from October 14 to October 25, 2015, at the Johannesburg Expo Centre, Nasrec.
UK engineering support services provider Babcock is set to deliver the largest order of global truck manufacturer DAF’s truck tractors in Southern Africa to bulk carrier road-based logistics company Ngululu Bulk Carriers (NBC), with 133 trucks to be delivered in...
Digital radio communications in the African local government space can open up the world, but have many challenges to overcome, notes integration and migration of legacy radio communications infrastructure with digital mobile radio company Emcom Wireless head of...