Future demand for cleaner fuels would justify building a new refinery and upgrading existing ones‚ deputy director-general of petroleum and petroleum product regulation in the Department of Energy Tseliso Maqubela said.
Government agency PetroSA proposed nine years ago building a R200-billion‚ 300000 barrels per day refinery‚ dubbed Mthombo‚ at Coega. A feasibility study began in 2012‚ but no decision has been made. It was envisaged the government would hold a 40% stake in Mthombo‚ with the rest held by the private sector.
Maqubela‚ who was speaking at a South African Petroleum Industry Association (Sapia) breakfast to launch its 2015 annual report‚ said it was not optimal for a country to be either self-sufficient or dependent on imports but to have the facilities in place for both.
The decision by Sonangol of Angola to halt work on the new Lobito refinery to reassess the project meant another entity had to move ahead with a refinery in sub-Saharan Africa.
SA was due to introduce cleaner fuels for the latest generation of vehicles by July next year. No upgrading has begun because the refineries want clarity on how they will recoup those costs.
The latest public cost estimate is $4.9-billion (R70.6-billion).
Maqubela said deregulating fuel prices‚ starting with 93-octane petrol‚ could allow the market to set prices that would incentivise investment in the upgrade. He emphasised this was a proposal to be discussed with the industry and no decision had been made.
Maqubela said the government did not want any refineries to close.
If it would cost too much to upgrade a refinery to make cleaner fuels‚ “then let us get the facts and evaluate it”.
Sapia chairman Maurice Radebe warned that without government incentives and cost-recovery allowances for investment in making cleaner fuels‚ SA’s petroleum refining industry would go the same way as its textiles and steel industries‚ which had dwindled as imports eroded their local market.
Imports of 50 parts per million diesel and higher-octane petrol were rising as local refineries could not produce as much as the market demanded.
Radebe said the Treasury had proposed accelerated depreciation over three years for the investments in upgrades‚ but this was not enough to recover the massive investments needed. Policy certainty was critical‚ he said.
Maqubela said some of the policy delays resulted from the department’s focus on electricity issues until recently‚ since decision-making was centralised.
The department was working on an integrated energy plan that would be presented to parliament shortly‚ and it would present scenarios for both imports and local refining of liquid fuels.
Radebe said Sapia’s activities included finalising the national oil spill response strategy‚ promoting black empowerment in the industry and skills development‚ and engaging with the Department of Environmental Affairs and the Treasury on climate change and carbon tax plans.
One of the challenges for security of supply was delays in completing Transnet’s multiproduct pipeline.
Radebe said that Sapia had been assured it would be completed in November‚ but there were doubts this could be achieved.
These delays were causing huge challenges for the industry. — BDLive
Delays in upgrade cloud SA quest for cleaner fuel
Government agency PetroSA proposed nine years ago building a R200-billion‚ 300000 barrels per day refinery‚ dubbed Mthombo‚ at Coega. A feasibility study began in 2012‚ but no decision has been made. It was envisaged the government would hold a 40% stake in Mthombo‚ with the rest held by the private sector.
Maqubela‚ who was speaking at a South African Petroleum Industry Association (Sapia) breakfast to launch its 2015 annual report‚ said it was not optimal for a country to be either self-sufficient or dependent on imports but to have the facilities in place for both.
The decision by Sonangol of Angola to halt work on the new Lobito refinery to reassess the project meant another entity had to move ahead with a refinery in sub-Saharan Africa.
SA was due to introduce cleaner fuels for the latest generation of vehicles by July next year. No upgrading has begun because the refineries want clarity on how they will recoup those costs.
The latest public cost estimate is $4.9-billion (R70.6-billion).
Maqubela said deregulating fuel prices‚ starting with 93-octane petrol‚ could allow the market to set prices that would incentivise investment in the upgrade. He emphasised this was a proposal to be discussed with the industry and no decision had been made.
Maqubela said the government did not want any refineries to close.
If it would cost too much to upgrade a refinery to make cleaner fuels‚ “then let us get the facts and evaluate it”.
Sapia chairman Maurice Radebe warned that without government incentives and cost-recovery allowances for investment in making cleaner fuels‚ SA’s petroleum refining industry would go the same way as its textiles and steel industries‚ which had dwindled as imports eroded their local market.
Imports of 50 parts per million diesel and higher-octane petrol were rising as local refineries could not produce as much as the market demanded.
Radebe said the Treasury had proposed accelerated depreciation over three years for the investments in upgrades‚ but this was not enough to recover the massive investments needed. Policy certainty was critical‚ he said.
Maqubela said some of the policy delays resulted from the department’s focus on electricity issues until recently‚ since decision-making was centralised.
The department was working on an integrated energy plan that would be presented to parliament shortly‚ and it would present scenarios for both imports and local refining of liquid fuels.
Radebe said Sapia’s activities included finalising the national oil spill response strategy‚ promoting black empowerment in the industry and skills development‚ and engaging with the Department of Environmental Affairs and the Treasury on climate change and carbon tax plans.
One of the challenges for security of supply was delays in completing Transnet’s multiproduct pipeline.
Radebe said that Sapia had been assured it would be completed in November‚ but there were doubts this could be achieved.
These delays were causing huge challenges for the industry. — BDLive
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