Coega oil refinery moves ahead

Johannesburg - South Africa's planned 400 000 barrels-per-day Coega oil refinery will start up in 2014, state-owned oil company PetroSA said on Thursday.

Half of its output will be exported to Sub-Sahara Africa, said Vukani Khulu, PetroSA's commercial manager for new ventures.

The refinery, which will cost an estimated $11bn to build, will be strategically located at the southern tip of South Africa, linking global trade routes.

Its capacity will help it achieve economies of scale, unlike the smaller refineries common in Africa, Khulu said.

"The refinery will come on stream in 2014 and we will be producing at full capacity from day one," Khulu said at an energy conference, adding that the refinery would produce crude at costs 20% to 30% lower than imported crude.

"Half of it will go to the South African market, the other half to the Sub-Saharan region."

Khulu also said the refinery could in the future also benefit from a potential pipeline connecting Coega with South Africa's inland and beyond. He said forecasts for strong demand justified its operations at least until 2030.

"It makes sense to invest in a refinery because of the growing local demand. Crude oil will be the main source of energy for the next coming 20 years," he said.

"There is enough demand in the Sub-Saharan Africa at least until 2030, throughout the whole lifespan of the refinery."

Khulu said the current credit crunch had little impact on the estimated cost of the project.

"We obviously are looking at the impact of the crisis on the refinery, but I don't think the cost itself has changed drastically," he said.

- Reuters