Page 8 - AfrOil Week 33 2021

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SOUTH AFRICA
LOCAL firm Sasol and its French joint ven- ture (JV) partner TotalEnergies are discussing whether to close or sell their Natref refinery at Sasolburg in South Africa, amidst a push for cleaner fuels.
Following internal assessments, the partners have decided that making alternations to the 107,000-barrel per day (bpd) facility to comply with South Africa’s incoming Clean Fuel 2 (CF2) legislation is not viable.
Speaking to Argus earlier this week, Sasol’s
chief financial officer Paul Viktor explained that current margins mean that the required invest- ment to make Natref comply with CF2 would be “sub-economical.” CF2 is equivalent to the Euro 5 standard.
Viktor went on to say that converting Natref would be much more costly than the conversion of the 160,000-bpd Secunda coal- to-liquids (CTL) refinery, which is expected to cost $400mn. Sasol holds 63% of Natref, with TotalEnergies holding the remainder.
The All Africa media outlet quoted Dangote Group sources as saying that the report was “false and malicious”, noting that the company has no issues in servicing its debt.
The story followed last week’s approval by the Nigerian Cabinet for the country’s national oil company to proceed with the acquisition of a stake in the 650,000-barrel-per-day (bpd) refin- ery which is expected to come on-stream early next year.
On August 4, Minister of State for Petroleum Resources Timipre Sylva said that Nigerian National Petroleum Corp. (NNPC) had received the green light to acquire a 20% in the Dangote Refinery project for a total of $2.76bn, valuing the total project at around $14bn, below the $15- 16bn valuation previously touted.
Term sheets were signed by NNPC and Dan- gote Group, with talks understood to be ongoing regarding the financing of the acquisition.
For NNPC, the deal is an important part of its new strategy for the downstream sector, fol- lowing decades of poor performance. However, the company admits that Dangote Group’s Pres- ident and CEO Aliko Dangote was not keen on NNPC’s involvement.
Speaking to This Day in mid-July, NNPC Managing Director Mele Kyari said of the
investment: “He didn’t ask for it. It’s our decision to take equity. We made this decision three years ago much earlier. It’s not what he wants, but they are also aware that they operate in a resource-de- pendent country. We made a request and it’s the policy of government that we take interest in this refinery.”
The stance of both parties is hardly surpris- ing when we consider that by its own admis- sion, NNPC failed to carry out satisfactory turnaround maintenance (TAM) on its four state-owned refineries at Port Harcourt (two), Kaduna and Warri. However, the state firm has embarked on a multi-billion dollar project to rehabilitate these facilities under a strategy that will see it take a backseat role in the country’s refining sector, outsourcing the maintenance and day-to-day running of operations.
Dangote has said previously that NNPC was one of four companies to make approaches to acquire equity in the refinery in order to secure crude supply deals.
Abuja needed a $1bn loan arranged by Cairo-based Afreximbank to kick off its refin- ery overhaul project, and there has been some speculation that the lender may be involved in supporting the acquisition of the stake in the Dangote unit. ™
Natref’s future uncertain, as Sasol and TotalEnergies discuss possible closure
Storage tanks at Natref plant (Image: TotalEnergies)
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w w w . N E W S B A S E . c o m Week 33 18•August•2021