Page 13 - DMEA Week 07 2022

DMEA REFINING DMEA

BP, Shell put Sapref

refinery on indefinite hold

AFRICA BP and Shell have announced plans to suspend (CTL) plant and the 107,000 bpd National Petro-
operations at South Africa’s Sapref refinery indef- leum Refiners of South Africa (Natref) unit in
initely, saying they cannot commit to any further Sasolburg are the country’s only remaining func-
expenditures until they make a decision on the tional refineries.
fate of the plant, which they have been operating Meanwhile, in August, local firm Sasol and
through a joint venture. its French JV partner TotalEnergies revealed
The two companies went public with their they were discussing whether to close or sell the
decision on February 10, explaining in a joint Natref facility.
statement that they intended to freeze invest- Sapref may resume operations in the future
ments and halt operations at the 180,000 barrel under the proper conditions, which may include
per day (bpd) plant near Durban by the end of a sale, the statement said. In the meantime, it said,
March. Sapref’s shareholders Shell and BP will make use
“The decision has been taken to allow an of their other assets and existing arrangements to
informed finalisation on the various options ensure fuel deliveries to customers and preserve
available to the shareholders, a sale option being South Africa’s energy supplies.
the most preferred,” they said. “Until decisions Taelo Mojapelo, CEO of BP Southern Africa,
about the future of the plant have been made – stressed this point. “Leading up to the refining
including a possible change of ownership – the pause, we have put contingencies in place to
Sapref shareholders are unable to commit to fur- ensure that this decision does not impact our
ther investment in the refinery.” customer-facing businesses in South Africa or
Sapref produces gasoline, diesel, marine fuel, our fuel supply obligations,” she said.
bitumen, base oils and paraffin waxes. Mojapelo also stated that BP remained com-
In September, the government implemented mitted to selling its stake in the refinery. “Sapref
its Clean Fuels 2 (CF2) legislation, under which has made immense economic contributions at
the new Petroleum Products Specifications and both a local and national scale,” she commented.
Standards mandate the use of ultra-low-sulphur “For this reason, we continue to pursue the sale
gasoline and diesel products from September of our share in the refinery so that it can continue
2023. to advance its legacy as a reliable, safe and pro-
The South African Petroleum Industry Asso- ductive asset.”
ciation (SAPIA) has warned that without finan- Sapref is the largest refinery in South Africa. It
cial support the new legislation could make the accounts for about 35% of the country’s oil-pro-
country’s remaining refineries obsolete within cessing capacity.
two years. SAPIA has been working with the gov-
ernment to find a resolution to issues with fund- Stepping in
ing the upgrade of six refineries in the country to Days after the announcement, a state-owned
allow them to produce cleaner fuels. asset manager was reported to be considering a
It warned in January that refiners would be move to acquire the refinery to secure its future.
unlikely to carry out nearly $4bn worth of com- Speaking to Bloomberg, two sources at the
bined overhaul work without government sup- Central Energy Fund (CEE), which manages
port or permission to raise fuel prices. South Africa’s energy assets, said the fund is
Following the announcement in April by assessing options for buying the Sapref unit,
Engen Petroleum, a subsidiary of Malaysia’s noting that they could leverage green financing
state-owned Petronas, that it would turn a to carry out upgrades to meet the country’s new
120,000 bpd refinery, also in Durban, into an clean fuel regulations. This is the second time in
import terminal following years of losses and a five months that such comments have emerged
fire, Sasol’s 160,000 bpd Secunda coal-to-liquids from the CEE, following reports in October.™

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