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Chevron to spend R400m, boost Cape Town jobs

Cape Town - Just weeks after raising concerns that a new rival petrol and diesel storage plant in Cape Town could close down their Western Cape refinery and storage operation, Chevron announced that it would be spending more than R400m on “maintenance and safety inspection” at its refinery.

READ: Gloves off on Chevron's Cape dominance

In a statement released to Fin24, the company said maintenance and safety inspections are carried out annually to ensure the safe and efficient running of the plant. The process this year would generate some 3 000 additional jobs.

The inspection will take place from February 13 to the end of March 2015.

“Supply constraints are carefully mitigated through the building up of strategic fuel supply in the time leading up to the planned maintenance and safety inspection,” said Doug Pottenger, general manager at the Chevron Cape Town refinery.

“Investing in the maintenance of the refinery ensures adequate product supply across all our markets. This year Chevron will invest R412m, a majority of which will be directly injected into the Western Cape economy,” he said.

Pottenger said some 3 000 extra contractors are employed during this safety inspection and maintenance period, including artisans, semi-skilled and unskilled workers.

The company cited an independent economic impact report conducted by Econex saying that the refinery at Milnerton procured some R2bn worth of goods and services annually, of which 70% “are from the Western Cape”.

A further 3.3% of the Western Cape’s GDP and 2.4% of employment in the province could be traced back to the ripple effects of Chevron’s operations in the Western Cape, the report stated.

A recent significant capital investment at the Chevron Cape refinery was the construction of a multi-point ground flare and a new 100 metre elevated flare to replace the refinery’s existing high-level flare. “This is a R450m investment, which has resulted in employment for 500 local residents,” said Pottenger.

“The ground flare is of world class technology and forms part of Chevron’s continued efforts to minimise the refinery’s environmental footprint and together with the new elevated flare, will improve the refinery’s operational efficiencies,” said Pottenger.

Chevron noted that during the maintenance and safety inspection all production units – with the exception of a number of storage tanks – would be shut down. The tanks will be used to manage the supply of products.

In December, Chevron reported that it would appeal to the national energy department to restrict supplies of imported clean fuels to a rival company’s proposed petrol and diesel storage plant - which had just been given the green light by the industry regulator.

READ: Chevron to appeal Burgan ruling

While Chevron said at the time that it had no problem at all with the decision by the National Energy Regulator of South Africa (Nersa) to allow the rival Burgan Cape Terminals to set up a storage plant in the Cape Town harbour and “welcomes competition”, its problem lay with what the plant would store.

Burgan Cape Terminals, a black empowered company, was given the green light to set up a rival storage plant in the Cape Town Harbour – a R600m project.

Chevron said at the time: “Whilst these facilities appeal to the current need for additional fuel due to electricity constraints, it will undermine investment in local manufacturing."

At the Nersa hearing in November, Chevron argued that if Burgan’s storage facility would be used for imported fuels, this would render Chevron’s entire Cape Town plant uncompetitive. It argued that it would put 500 direct jobs and 13 000 indirect jobs in severe danger and could, indeed, close its refinery plant altogether.

READ: Chevron ups ante in diesel storage wars

Fin24 put the question to Chevron’s communications company, FTI Consulting, as to why Chevron was engaging in an expensive maintenance programme when there is a danger that the entire plant could shut down.

Chevron previously said that international experiences of “excessive imports” had shown that local refinery production and jobs were decimated.

FTI Consulting’s Jeffrey Onganga replied: “The Chevron refinery follows a detailed schedule for maintenance and safety inspections in order to proactively manage the reliability of the plant. These operations are routine procedures for refineries around the world. Every year we commit funds to maintain reliable operational standards at the refinery and ensure the safety of our employees and neighbouring communities.”

Describing the maintenance and safety inspection this year as “one of our biggest routine… inspections in history”, Onganga said the investment formed part of Chevon’s normal practices and was not dependent on Nersa’s decision regarding Burgan Cape Terminals’ facility in Cape Town.

“Preserving our equipment is a key part of our processes around the globe aimed at protecting the environment and sustaining high standards in terms of safety,” said Onganga on behalf of Pottenger, while noting that Chevron is the main provider of fuel in the Western Cape “and therefore it is important that our refinery remains reliable”.

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