Page 4 - DMEA Week 19 2022

DMEA COMMENTARY DMEA

SA suffers imports

headaches as refinery

closures continue

Once home to a downstream capacity of more than 700,000 bpd, South Africa’s
refining sector is in disarray amid closures and midstream bottlenecks.

AFRICA SOUTH Africa’s fuel imports are set to increase Location Operator Refinery Total (bpd)
dramatically as challenging headwinds bring Durban BP & Shell (JV) Sapref 180,000
about the closure of more of the country’s Durban Petronas Engen 120,000
WHAT: refineries. With imports already accounting Sasolburg Sasol & TotalEnergies (JV) Natref 107,000
One of its four refineries for almost two thirds of fuel demand, industry Cape Town Glencore Cape Town 100,000
has closed permanently, reports suggest that shortages are likely to grow Secunda Sasol Secunda CTL 160,000
another is shuttered more acute, particularly in the country’s interior. Mossel Bay PetroSA Mossel Bay GTL 45,000
pending sale and a third While having already come under economic Total 712,000
is in limbo awaiting a strain, refinery owners have been shutting down
decision on its fate. operations as the government moves to man- While Citac offered some hope, noting that Table of South African
date the use of ultra-low-sulphur gasoline and Glencore’s Astron unit would likely resume downstream facilities
WHY: diesel from next year, a move that would require operations in Q3 this year, the prospects for the including shuttered
Poor economics have existing facilities to invest heavily just to keep the sector are bleak. facilities.
been exacerbated by lights on. BP and Shell indefinitely suspended opera-
stringent new fuel In 2020, the South African downstream com- tions at their Sapref joint venture (JV) refinery Source: IGM Energy
regulations, stifling any prised four refineries – two in Durban, one in in late March, saying they would not commit to
remaining commercial Sasolburg and another in Cape Town – with a any further expenditures until they make a deci-
interest. theoretical nameplate capacity of 507,000 barrels sion on the fate of the plant. The companies are
per day, as well as the 160,000 bpd Secunda coal- now understood to be looking for a buyer for the
WHAT NEXT: to-liquids (CTL) plant which utilises Sasol’s pro- 180,000 bpd facility located on the Indian Ocean
While the future for prietary Fischer-Tropsch (FT) technology and coast, just outside Durban.
refining is bleak, South NOC PetroSA’s 45,000 bpd Mossel Bay gas-to- State-owned asset manager the Central
Africa must act quickly to liquids (GTL) facility. However, various factors Energy Fund (CEF) is reported to have been
avoid this causing major have conspired to significantly reduce usability considering a move to acquire the refinery and
supply issues. and utilisation rates during the past two years. secure its future, and while officials visited the
refinery in March, no comments have been
Refining downturn forthcoming and the partners continue to search
A country overview by downstream-focused for a buyer.
consultancy Citac presented data suggesting that Meanwhile, Sasol has said that investments
output from South African refineries had fallen required to make its JV Natref refinery with
from 438,000 bpd in 2018 to around 240,000 TotalEnergies comply with new industry regula-
bpd in 2021, with this figure seen dropping to tions would be “sub-economical” as the partners
just 219,000 bpd this year. look to decide the unit’s fate later this year, with
Citac highlighted the main factors in the sale, closure or conversion for storage or blend-
decline as “the closure of the Engen Refinery [in ing all said to be under consideration.
Durban], the lack of gas or economically viable
condensate feed to run the PetroSA refinery, and Regulations
the explosion at the Astron Refinery [in Cape While years of downturn had already strained
Town] in mid-2020.” South African refiners, the rush for the exits
It added that the decline had been more came in earnest when the government imple-
rapid because of Engen’s decision to close its mented its Clean Fuels 2 (CF2) legislation in
refinery in December 2020 rather than 2023 September last year, under which the new Petro-
following years of losses and a fire. The facil- leum Products Specifications and Standards
ity will be converted into an import terminal. mandate the cleaner fuels from Q3 2023.

P4 www. NEWSBASE .com Week 19 12•May•2022