Page 13 - DMEA Week 39 2021

DMEA REFINING DMEA

Association gives SA refinery warning

AFRICA THE South African Petroleum Industry Associ- refinery, which is expected to cost $400mn. Sasol
ation (SAPIA) this week warned that the coun- holds a 63% of Natref with TotalEnergies holding
try’s remaining refineries could become obsolete the remainder.
within two years without financial support. Viktor said that embarking on such a pro-
The warning comes as authorities push for gramme “is not going to happen. We are not
cleaner fuels under the incoming Clean Fuels 2 going to put that money in at that quantum, only
(CF2) legislation which has already rendered at to not make a return on it,” he added.
least one facility ‘sub-economical’. Alternative options are to convert Natref into
The new Petroleum Products Specifications a storage and blending facility, sell it or close it,
and Standards mandate the use of ultra-low sul- the CFO said.
phur gasoline and diesel products from Septem- In April, Engen Petroleum, a subsidiary of
ber 2023. Malaysia’s state-owned Petronas, announced it
SAPIA has been working with the govern- would convert its 120,000 bpd refinery in Dur-
ment to find a resolution to issues such as fund- ban into an import terminal following years of
ing the upgrade of six refineries in the country to losses and a fire in December following which it
allow them to produce cleaner fuels. has not resumed operations.
It warned in January that refiners would be The company’s CEO Yusa Hassan said that
unlikely to carry out nearly $4bn worth of com- the decision had been taken following an “exten-
bined overhaul work without government sup- sive strategic evaluation”, with the fuel terminal
port or permission to raise fuel prices. expected to be commissioned in Q3 2023 and
Meanwhile, in August, local firm Sasol and its limited refining operations carrying on in the
French joint venture (JV) partner TotalEnergies meantime.
revealed they were discussing whether to close or Hassan said: “The conclusion of the strategic
sell their Natref refinery at Sasolburg. assessment is that the Engen refinery is unsus-
Following internal assessments, the partners tainable in the longer term. This is primarily
have decided that making alternations to the due to the challenging refining environment
107,000 barrel per day (bpd) facility to comply as a result of a global product supply surplus
with South Africa’s incoming Clean Fuel 2 (CF2) and depressed demand, resulting in low refin-
legislation is not viable. Speaking to Argus this ing margins, and placing the Engen refinery in
week, Sasol’s chief financial officer Paul Viktor financial distress.”
said that current margins mean that the required He added that refitting the plant, which
investment to make Natref comply with CF2 opened in 1954 making it South Africa’s old-
would be “sub-economical.” CF2 is equivalent est, to meet emissions regulations would be too
to Euro 5. costly. “Furthermore, unaffordable capital costs
He said that converting Natref would be to meet future CF2 regulations compliance con-
much more costly than the conversion of the tinues to be a challenge for the long-term sus-
160,000 bpd Secunda coal-to-liquids (CTL) tainability of the refinery.”™

Week 39 30•September•2021 www. NEWSBASE .com P13