Page 11 - DMEA Week 33 2021

DMEA REFINING DMEA
Natref’s uncertain future under consideration
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 amid 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 this week, Sasol’s chief financial officer Paul Viktor said that current margins mean that the required investment to make Natref comply with CF2 would be “sub-economical.” CF2 is equivalent to Euro 5.
He said 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.
Viktor said that embarking on such a pro- gramme “is not going to happen”. “We are not going to put that money in at that quantum, only to not make a return on it,” he added.
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 strategic bene- fit for Sasol as it seeks to create sustainable avi- ation fuel (SAF) and chemicals at Secunda fed by green hydrogen and utilising Fischer-Tropsch technology.
Natref could be used to blend products to specifications required by Secunda and would allow the company to leverage the multi-prod- uct pipeline that serves the refinery to import
products to the inland depot.
Viktor noted that if using Natref as a storage
and blending plant turns out to also be unviable, it could be sold. Failing that, the plant would be closed, he said, with a decision expected in the next few months.
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 following which it has not resumed operations.
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 Q3 2023 and limited refining operations carrying 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 financial distress.”
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.”™
Week 33 19•August•2021 w w w . N E W S B A S E . c o m P11