Page 6 - AfrOil Week 17 2021

AfrOil COMMENTARY AfrOil

The US is not the only country where develop- Energy has previously warned that if Qatar
ers are backing away from LNG project pro- pushes ahead with its LNG expansion ambi-
posals. In March, Chevron announced that it tions – as it is now doing – potential projects
had ceased directing any further funding to the elsewhere in the world could face a grim outlook
proposed Kitimat LNG project in Canada, hav- in competition against Qatar’s low break-even
ing tried and failed to sell its 50% stake in the prices.
project. In the longer term, however, the outlook is
All of these developments suggest that different. Another consultancy, Wood Macken-
despite LNG’s relative resilience during the early zie, recently warned of a supply gap of 50mn tpy
months of the coronavirus (COVID-19) and the in 2030, and its director of LNG, Giles Farrer, has
dramatic spike in demand for the super-chilled said he expects the shortfall to widen to more
fuel over the Northern Hemisphere’s winter, than 170mn tpy by 2035.
conditions remain challenging for developers. In the shorter term, though, LNG produc-
And in that context, the deferral – or even loss ers rely in large part on off-take agreements to
– of Mozambique LNG’s projected volumes underpin the financing plans for their devel-
of 12.88mn tpy may boost competitors’ medi- opments, and while there has been anecdotal
um-term prospects. evidence of more demand for the fuel since the
Analysts including Tudor, Pickering, Holt winter, few new long-term supply deals have
& Co. (TPH) anticipate that LNG supply could been announced. Indeed, Qatar has dominated
overwhelm demand over the 2026-2030 period. the handful of long-term supply deal announce-
Similarly, the Norwegian consultancy Rystad ments that have been made in recent months. ™

PIPELINES & TRANSPORT
Durban oil refinery set to be

converted into import terminal

SOUTH AFRICA SOUTH Africa’s oldest oil refinery is to be con-
verted into an import terminal following years
of losses and a fire in December, following which
it has not resumed operations.
The 120,000 barrel per day (bpd) Durban
facility is located on the east coast and owned
by Engen Petroleum, a subsidiary of Malaysia’s
state-owned Petronas.
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 The Durban plant is South Africa’s oldest refinery (Image: Engen)
and depressed demand, resulting in low refin-
ing margins, and placing the Engen refinery in previously said it remained “fully committed to
financial distress.” operating the Engen refinery in a safe and relia-
He added that refitting the plant, which ble manner”, though adding it was “considering
opened in 1954, to meet emissions regulations several options”.
would be too costly. Turnaround maintenance (TAM) was car-
“Furthermore, unaffordable capital costs to ried out during a 45-day programme in Febru-
meet future CF2 [equivalent to Euro 5] regula- ary 2018.
tions compliance continues to be a challenge for The plant’s product range includes auto-
the long-term sustainability of the refinery,” he motive, industrial, aviation and marine fuels,
stated. bitumen, lubricants, chemicals and solvents
The refinery was shut completely following and, until its closure, it provided around 17% of
a fire on December 4 last year and Engen had South Africa’s refined petroleum products.

P6 www. NEWSBASE .com Week 17 28•April•2021