Questions over ECape oil refinery site

Oct 17 2012 15:47
Cape Town - MPs on Wednesday expressed concern about the proposed new Mthombo oil refinery to be built in the Eastern Cape.

"My reservations are partly where they want to site it..." Lance Greyling of the Independent Democrats said after a presentation by PetroSA to Parliament's energy portfolio committee.

The proposed site - the Coega Industrial Development Zone near Port Elizabeth - had no infrastructure in terms of pipelines to the inland part of the country.

This would probably add an extra R40bn to R50bn to the investment.

Greyling questioned where the money and energy requirements would be sourced from.

"In PetroSA's mind it might be a foregone conclusion, but it really needs to make sense from a financial point of view, because the money is going to have to be raised somewhere; Treasury is going to have to be involved, we going to have to take loans.

"We are going to have to make sure we don't overspend and aren't able to repay that, and in the end it pushes up prices for consumers in a way that they can't afford."

Greyling said serious debate was needed in the country before a firm decision was made to go ahead with the project.

PetroSA's plans also clashed with the National Development Plan, he said.

The NDP stated no firm decision needed to be made immediately.

It would be less risky and more cost-effective to continue importing a share of the refined product until the country reached a stage where it could absorb the costs associated with building a new refinery, Greyling said.

PetroSA CEO Nosizwe Nokwe-Macamo said the refinery's location was unlikely to change from the planned site at the Coega IDZ.

However, she was unclear about how the refined product would get from Coega to where it was needed inland.

The pipeline from Durban could be used to get fuel to Gauteng, where demand was highest.

"The pipeline is there, it exists, we sweat (derive value from) an asset and you are going to have to find ways of shuttling the product."

Nokwe-Macamo would not say whether the end product would be shipped from Port Elizabeth to Durban, insisting they would only be able to answer that question after she received the results of a feasibility study to be completed by year-end.

"We don't know yet, let's wait to December because we don't want to say vessels will be running all over the show, then you've got the environmentalists saying where are your EIAs?" she said.

The study, which was being done in collaboration with Chinese state-owned company Sinopec, would give PetroSA an indication of the market size they were dealing with, what size plant was needed, and other issues on configuration.

The results would also include a proposal on what equity stake Sinopec would get in the refinery, she said.

Experts have warned the costs of building a refinery at Coega, along with building other related infrastructure, such as a power station and a pipeline, could be excessive and could see costs passed on to South African fuel users.
petrosa  |  eastern cape  |  oil refinery



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