Page 15 - DMEA Week 02 2021

DMEA REFINING DMEA

Refinery closures set to increase South

Africa’s dependence on fuel imports

SOUTH AFRICA REFINERY closures are likely to make South Natref plant in Sasolburg. At the same time, all
Africa more dependent on petroleum product four refineries are also facing a rise in expendi-
One of the country’s imports in the near term, according to Citac, a tures, owing to upcoming changes in emissions
refineries caught fire in UK-based consultancy that monitors Africa’s standards. At the same time, they have also seen
December. downstream sector. their finances suffer because of the coronavirus
Citac noted earlier this week that it antici- (COVID-19) pandemic, which has constrained
pated this shift because two of the country’s four global demand for energy and fuels.
refineries are set to remain offline until 2022 at Going forward, Citac noted, South Afri-
least. Together, these two plants account for 43% ca’s downstream sector is likely to be under
of South Africa’s total oil-processing capacity of even more pressure. Local press agencies have
500,000 barrels per day, it noted. reported that Engen intends to shutter its Dur-
One of the plants in question is the Durban ban plant in 2023 and convert it into a fuel termi-
refinery, a 120,000 bpd facility owned by Engen nal. The closure will not only constrain domestic
Holdings, an affiliate of Malaysia’s Petronas. This supplies but also raise questions about whether
unit suspended operations in December follow- the Petronas affiliate should spend the money to
ing a fire. bring the refinery back online next year.
The other affected unit is a 100,000 bpd If the Durban refinery is indeed sched-
refinery in Cape Town owned by Astron uled to close in 2023, “it would not make eco-
Energy, a unit of the Anglo-Swiss commodity nomic sense to invest into bringing it back up,”
trading firm Glencore. It has been inopera- remarked Elitsa Georgieva, an analyst at Citac.
tional since last July, when it suffered an explo- When contacted by Bloomberg, neither
sion and fire. Astron nor Engen commented on the future of
These closures have compounded other prob- their refineries.
lems in South Africa’s downstream sector, Citac If, as anticipated, South Africa becomes more
explained. The country’s other two refineries dependent on fuel imports, other countries will
are now under review, with Royal Dutch Shell be affected by this shift. Botswana, for example,
(UK/Netherlands) taking another look at its is heavily reliant on purchases of South African
holding in Sapref, a joint venture with BP (UK) petroleum products and is still working to ham-
that operates a 180,000 bpd unit near Durban, mer out supply deals with nearby countries such
and Sasol (South Africa) mulling the future of its as Namibia and Mozambique. ™

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