Location a key discussion point as Saudi Aramco mulls South African refinery investment

18th January 2019 By: Terence Creamer - Creamer Media Editor

Location a key discussion point as Saudi Aramco mulls South African refinery investment

Kingdom of Saudi Arabia’s Energy, Industry and Mineral Resources Minister Khalid Al-Falih with South Africa's Energy Minister Jeff Radebe

“Location, location, location,” South Africa’s Minister Jeff Radebe quipped on Friday after a meeting with his Saudi counterpart, Khalid Al-Falih, where it was agreed that Saudi Aramco and the Central Energy Fund (CEF) would jointly study a plan for a new oil refinery and petrochemical investment in South Africa.

Radebe listed both Coega, in the Eastern Cape, which had been earmarked previously by the CEF’s PetroSA as a possible location for a refinery that failed to materialise, as well as Richards Bay, in KwaZulu-Natal, as possible siting options.

Al-Falih, who is the Kingdom of Saudi Arabia’s Energy, Industry and Mineral Resources Minister, underlined the strategic importance of site selection, describing a previous offer of a location by South Africa to Saudi Aramco as “not attractive at all, which really prevented us from moving forward”.

He did not identify that previous location, saying only that it was on the “western side of the country”.

Al-Falih and Radebe signed a declaration of intent stating that the two countries would pursue energy cooperation and reported that two memoranda of understanding would be concluded in the coming months to provide the framework for greater cooperation in the areas of energy and power generation.

Saudi Aramco and CEF would, in the meantime, proceed with a feasibility study that, besides defining the scope and scale of the project, would prioritise site selection.

Besides the possible refinery and petrochemical project, Saudi Aramco would also investigate prospects for making commercial use of South Africa’s crude oil storage tanks in Saldanha Bay.

The storage facility, Al-Falih said, could provide a strategic location for Saudi Aramco in its trading of crude oil with regional offtakers.

Both initiatives, should they materialise, would contribute to the Kingdom of Saudi Arabia pledge to invest $10-billion into the South African economy in response to President Cyril Ramaphosa’s $100-billion investment drive.

Saudi companies are already active in South Africa’s renewable-energy sector and ACWA Power has reaffirmed that it is keen to invest in future coal, gas-to-power and renewables projects in the country.