Page 5 - AfrOil Week 20 2022

AfrOil COMMENTARY AfrOil

While Citac offered some hope, noting that enables us to pivot as cost-effective mitigation
Glencore’s Astron unit would likely resume levers become available. We are also avoiding
operations in Q3 this year, the prospects for the infrastructure lock-in and regret capital spend.”
sector are bleak. BP and Shell indefinitely sus- He said that its FT technology is particu-
pended operations at their Sapref joint venture larly well-suited to playing a meaningful role
(JV) refinery in late March, saying they would in a low-carbon future, with attractive new and
not commit to any further expenditures until emerging value pools.
they make a decision on the fate of the plant. The “Against this backdrop, we are setting up a
companies are now understood to be looking for new business, Sasol ecoFT, with the intent to
a buyer for the 180,000 bpd facility located on build on our technology leadership, to establish
the Indian Ocean coast, just outside Durban. a significant market position internationally.
The state-owned asset manager, the Central One of the first applications for the technology
Energy Fund (CEF), is reported to have been is likely to be sustainable aviation fuels, where
considering a move to acquire the refinery and new regulations are driving demand, and exist-
secure its future. But while officials visited the ing technology and feedstocks have limitations
refinery in March, no comments have been that FT can address.” The rush for the
forthcoming and the partners continue to search
for a buyer. Import uptick exits came in
Meanwhile, Sasol has said that investments While the future for the Secunda plant may be earnest when
required to make its JV Natref refinery with secure, it appears increasingly likely that unless
TotalEnergies comply with new industry regula- BP and Shell can find a buyer that has its own the government
tions would be “sub-economical” as the partners crude to import to South Africa for refining,
look to decide the unit’s fate later this year, with Sapref may face a similar fate to the Engen unit. implemented its
sale, closure or conversion for storage or blend- Citac noted that the planned closures –
ing all said to be under consideration. “mostly in response to the CF2 regulations” Clean Fuels 2
– would leave the country with a crude and legislation last
Regulations condensate refining capacity of just 145,000
While years of downturn had already strained bpd, down from the current 432,000 bpd, plus September
South African refiners, the rush for the exits Secunda CTL.
came in earnest when the government imple- With that in mind, the consultant said that
mented its Clean Fuels 2 (CF2) legislation in South Africa’s monthly refined product imports
September last year, under which the new Petro- could increase by up to 300%, but it cautioned
leum Products Specifications and Standards that midstream improvements would need to be
mandate the cleaner fuels from Q3 2023. made in order for the country’s infrastructure to
The South African Petroleum Industry cope with the rise. The majority of South African
Association (SAPIA) has warned that the new crude oil and refined products arrive at Durban,
legislation could make the country’s remaining from which point a pipeline runs to Sasolburg.
refineries obsolete within two years without Meanwhile, these concerns are raising their
financial support. SAPIA has been working with head in public with jet fuel shortages coincid-
the government to find a resolution to issues ing with major flooding to hamper operations
with funding the upgrade of six refineries in the at South Africa’s busiest airport, OR Tambo
country to allow them to produce cleaner fuels. in Johannesburg, which appears bereft of a
It warned in January that refiners would be back-up plan. Fuel imported at Durban must be
unlikely to carry out nearly $4bn worth of com- certified by Natref before it can be sent on to OR
bined overhaul work without government sup- Tambo, a process that takes two weeks or more.
port or permission to raise fuel prices. If the bulk of South Africa’s refining sector is
While the Astron facility is set to resume doomed, the authorities would be well advised
operations, there is reason to question its long- to act quicky to improve the midstream or the
term importance to Glencore, whose former fuel supply squeeze will only intensify. ™
CEO, Ivan Glasenberg, once described it as “a
nice short to have for the trading business”.
This leaves Secunda CTL as the one down-
stream facility that is neither struggling for
feedstock, being sold, shutdown nor facing
conversion for other uses. The unit is currently
undergoing a $400mn conversion programme
that will ensure compliance with CF2 as part of
a company-wide effort to reduce emissions. In
September, Sasol announced it would not invest
in new coal projects, setting a target of net-zero
emissions by 2050.
The company’s president and CEO, Fleet-
wood Grobler, said at the time that shifting its
feedstock away from coal, towards more transi-
tion gas, and then green hydrogen and sustain-
able carbon over the longer term, as economics
improve for these options, “offers agility and Engen’s 180,000 bpd Sapref plant has now been closed (File Photo)

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