Page 9 - AfrOil Week 33 2021

AfrOil INVESTMENT AfrOil
Viktor said that embarking on such a pro- gramme was “not going to happen.” He added: “We are not going to put that money in at that quantum, only to not make a return on it.”
Alternative options are to convert Natref into a storage and blending facility, sell it or close it, the CFO said. The first of these could be of stra- tegic benefit for Sasol, as the company seeks to create sustainable aviation fuel (SAF) and chem- icals at Secunda fed by green hydrogen and uti- lising Fischer-Tropsch technology. Natref could be used to blend products to specifications required by Secunda and would allow the com- pany to leverage the multi-product pipeline that serves the refinery to import products to the inland depot.
Viktor noted that if using Natref as a storage andblendingplantturnsouttoalsobeunviable, it could be sold. Failing that, the plant would be closed, with a decision expected in the next few months, he said.
CF2 poses yet another challenge to South Africa’s refining sector which has been strug- gling to remain profitable amid several crises.
In April, Engen Petroleum, a subsidiary of Malaysia’s state-owned Petronas, announced it
would convert its 120,000-bpd refinery in Dur- ban into an import terminal, following years of losses and a fire in December. The plant has not resumed operations since the blaze.
The company’s CEO Yusa Hassan said that the decision had been taken following an “exten- sive strategic evaluation” with the fuel terminal expected to be commissioned in the third quar- ter of 2023 and limited refining operations car- rying on in the meantime.
Hassan said: “The conclusion of the strategic assessment is that the Engen refinery is unsus- tainable in the longer-term. This is primarily due to the challenging refining environment as a result of a global product supply surplus and depressed demand, resulting in low refin- ing margins, and placing the Engen refinery in financialdistress.”
He added that refitting the plant, which opened in 1954 making it South Africa’s old- est, to meet emissions regulations would be too costly.
“Furthermore, unaffordable capital costs to meet future CF2 regulations compliance contin- ues to be a challenge for the long-term sustaina- bility of the refinery,” he said.™
PERFORMANCE
NNPC provides direct purchase data
NIGERIA
NIGERIAN National Petroleum Corp. (NNPC) bought 145.9mn barrels of crude oil under the direct sales and direct purchase (DSDP) scheme for refining during the 12-month period starting in March 2020.
In its latest report, the company said that all of the crude was processed and refined at overseas refineries and came in at a total cost of NGN2.4 trillion ($5.83bn).
It said that in March 2021, 7.55mn barrels of crude were lifted from its daily allocation for domestic utilisation, “translating to an average volume of 243,650 [barrels per day or bpd] in terms of performance”. The full amount was pro- cessed under the DSDP scheme.
Having failed to carry out satisfactory turnaround maintenance (TAM) on its four state-owned refineries at Port Harcourt (two), Kaduna and Warri, 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.
Following the agreement of a $1bn loan from Cairo-based African Export-Import Bank (Afreximbank) in February, NNPC awarded an engineering, procurement and construction (EPC) contract for the project to Italy’s Maire Tecnimont in April.
NNPC bought oil to cover domestic fuel demand (Photo: NNPC Retail)
NNPC noted that it had utilised the DSDP scheme in order to “ensure sustained product supply across the country” and added that the country would reach gasoline self-sufficiency once the refinery rehabilitation project is com- pleted and the 650,000-bpd Dangote Refinery comes into operation next year.
On August 4, Minister of State for Petroleum Resources Timipre Sylva said that NNPC had received the green light to acquire a 20% stake 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 Dangote Group, with talks understood to be ongoing regarding the financing of the acquisi- tion. ™
Week 33 18•August•2021 w w w . N E W S B A S E . c o m P9