Page 5 - AfrOil Week 10 2023

AfrOil COMMENTARY AfrOil

This was the second time in five months that closure, conversion for storage or blending all
such comments have emerged from the CEF, said to have been under consideration. While
following reports in October 2021. the company welcomed the delays in imple-
menting CF2, it said it would continue to “eval-
Shake-up uate options” for the facility. No announcement
Prior to closing, Sapref was producing gasoline, has yet been made public.
diesel, marine fuel, bitumen, base oils and par- On February 1, Astron that it was set to
affin waxes. Its closure came around six months re-commission its Cape Town plant, noting
after the government implemented its Clean plans “to fully recommence the production of
Fuels 2 (CF2) legislation, under which the new refined products for supply into the Western
Petroleum Products Specifications and Stand- Cape and the wider South African regions in
ards mandate the use of ultra-low-sulphur gas- the coming weeks.”
oline and diesel products from September 2023. Glencore first acquired the plant in 2019
The South African Petroleum Industry Asso- as part of a $1bn deal with Chevron, and had
ciation (SAPIA) warned at the time that the new recently completed a $400mn upgrade to the
legislation could make the country’s remaining facility in order to allow it to produce low-sul-
refineries obsolete within two years without phur fuel. Glencore CEO Gary Nagle had also
financial support. SAPIA has since been work- suggested the refinery would eventually be
ing with the government to find a resolution to able to produce fuel in line with South Africa’s
issues with funding the upgrade of six refineries incoming clean fuel legislation, saying: “We
in the country to allow them to produce cleaner are bringing it back on and we believe there is a
fuels. commercial case to do that”.
It warned that refiners would be unlikely to Meanwhile, in January, South Africa’s state
carry out nearly $4bn worth of combined over- oil firm PetroSA kicked off efforts to find part-
haul work without government support or per- ners to reinvigorate the moribund Mossel Bay
mission to raise fuel prices, and this is likely to GTL unit. The company issued a request for
have factored into the government’s decision in proposals (RFP) for the “development, refur-
August to postpone the CF2 deadline until 2027. bishment, modification, upgrade, funding
Thanks to a combination of legislation and and/or operation” of the facility, to reinstate With most
mismanagement, the country has seen a mass full production “in the earliest possible time at
decline in operational refineries, with Glen- least costs”. Operations were halted in 2020 due refining slates
core’s 100,000-bpd Astron Refinery in Cape to feedstock challenges resulting from a sharp largely out of
Town being taken out of commission following decline in local gas production. PetroSA’s RFP
a mid-2020 explosion and Engen Petroleum, a notes that it is developing a ‘long-term feedstock commission,
subsidiary of Malaysia’s state-owned Petronas, solution’, which is expected allow full produc-
announcing its ambitions to turn its 120,000- tion from the asset by 2027/2028. shortages of
bpd refinery in Durban into an import terminal At present, NewsBase understands that
following years of losses and a fire. South Africa’s current operable refining petroleum
Various other factors have also conspired throughput capacity is around 330,000-340,000 products have
to significantly reduce usability and utilisation bpd, comprising Astron, Natref and the Secunda
rates at NOC PetroSA’s 36,000-bpd Mossel Bay CTL plant which utilises Sasol’s proprietary Fis- been acute
gas-to-liquids (GTL) facility over the past two cher-Tropsch (FT) technology.
years. Continuing shut-downs the 107,000 bpd While falling well short of the 700,000 bpd
National Petroleum Refiners of South Africa slate available in 2018/2019 before the closures
(Natref), Sasol’s 160,000 bpd Secunda coal-to- of Engen, Sapref and Mossel Bay GTL, the
liquids (CTL) plant and Sapref meant South resumption of operations at Astron and stability
Africa had no operational refineries as of July at Natref will likely bring a notable improvement
2022. on the reported production of 215,000-225,000
bpd reported last year.
A new lease on life
However, while the Sapref talks appear some Mutual benefits
distance from bearing fruit, there are signs With most refining slates having been largely
that a revival may be on the cards as operators out of commission, shortages of petroleum
aim tap into the massive gap in domestic fuel products have been acute, leading to pump
production. price spikes as well as fuel shortages at major
While it is not officially shut in, local firm airports. However, a ramping back up of refin-
Sasol and its French partner TotalEnergies had ing will allow the country to ease its logistical
faced issues procuring feedstock last year for problems and lessen its dependence on foreign
their Natref JV unit in Sasolburg. In August fuel imports.
though, the partners said the unit had restarted, Alluding to the major opportunity presented
adding that it was ramping up production by the country’s large and growing product
despite being under force-majeure. demand, Glencore’s Nagle said last year that
Sasol previously said that investments the Astron unit had been improved during its
required to make Natref comply with new rebuild and would produce additional products.
industry regulations would be “sub-econom- This has allowed the company to change its cost
ical”. At the time, partners expected to make a base, providing confidence that it will be prof-
call on the plant’s fate later in 2022, with sale, itable. ™

Week 10 09•March•2023 www. NEWSBASE .com P5