Planned refinery to save SA billions

2010-10-14 15:29

Mossel Bay - A planned crude oil refinery to be built in the Eastern Cape will save South Africa about R12.6bn a year in energy costs, President Jacob Zuma said on Thursday.

"This country stands to save... once the refinery is running, and could export oil across Africa," Zuma said in a speech prepared for his visit to PetroSA's gas liquid refinery in Mossel Bay on Thursday.

He said the project, expected to be built by 2015, would showcase South Africa's competitive ability to its global counterparts which was important for the image of the country.

It would also help the country escape from the current dependency trap where refined automotive products had to be imported, he said.

Once completed, the refinery in the Coega Industrial Development Zone near Port Elizabeth would be the biggest in Africa.

"We welcome the fact that PetroSA is making its impact, not only in job creation but in empowering the people as well. It employs close to 2000 people, while 27 500 more will be absorbed within the crude oil refinery that is planned," he said.

Zuma also welcomed the impressive growth of PetroSA from its successful merger of Mossgas, Soekor and parts of the Strategic Fuel Fund in 2002.

"To be able to reach the markets in Europe, the USA, Caribbean, Middle East and the Far East, is an important achievement.

"With the company supplying about seven percent of South Africa's liquid fuel needs, indications are that we will lessen our dependence on foreign sources of fuel," Zuma said.

Referring to the company's partnership with the University of the Western Cape for a R36m sponsorship to establish a Synthetic Fuels Research Facility at the university, Zuma said it would help bridge the gap between academic knowledge and practical involvement in the field.
"This is not only much needed skills intervention. It is also part of opening up opportunities to previously disadvantaged institutions to enable them to make a significant contribution to economic development," Zuma added.

  • TMan - 2010-10-14 15:48

    This is a crude example (excuse pun) that the man is either diguided or ill-adviced. If the new refinery at Coega is built, it will require upto R80bn from the shareholder, being the taxpayer essentially. Highly unlikely that PetroSA would be able to raise a large part of that in debt, and the interest payments would be crippling because the project is likely to be overbudget and not in-time. Also, and more importantly, this would put paid to the proposed Mafutha project on the inland, which would use our own coal & be privately funded & built. The importing of crude oil for the new PetroSA refinery will not do our balance of payments any good. There's currently an expanding overcapacity in the refining world, so instead of this parastal & gov competing with private capital for the sake of an image make-over, they should rather spend taxpayers money where it's needed most: road infrastructure, water & sewage systems, acid-mine resolution, housing, hospitals/clinics. Mega-projects like this always result in pains for the taxpayer . . . such as procurement corruption, etc.

  • angus - 2010-10-14 17:50

    The biggest question I have is how will the refined fuel get to the rest of the country, there is no pipeline to anywhere from PE, leaving road as the biggest option and a sorry excuse of rail to Johannesburg. This will thus place enormous strain on our already poor road infrustructure in the Eastern Cape.

  • Slimme - 2010-10-14 20:48

    @TMan - Perhaps you should stick to playing computer games than trying to make statements about something you obviously have no clue about.

  • Kevyn - 2010-10-14 22:03

    Pie in the sky , South Africa already has excess refining capacity. Thats why the existing refineries have not expanded

  • martin albert - 2010-10-15 06:56

    My limited understanding is that any new investment in refinery capacity carries huge environmental requirements which existing refineries are dead set against unless gov assists with finance. In addition the majority of refinery profits leave the country as they are not SA owned. And I assume that most of the product will leave via the harbour for the Durban Joburg pipeline. Although I agree most mega-projects are a mess in terms of final cost and duration, this project is the first where part private ownership will be a successful completion driver.

  • Nasdaq7 - 2010-10-15 07:54

    Tman I don't the details, but I do know there is a lot of oil exploration now in Africa and by 2030 Africa will be one of the world's greatest suppliers of oil. Then such a refinery will surely be in demand.

  • Chemicals Analyst - 2010-10-15 09:13

    as simplistic as this might sound, the way forward is regional co-operation. Instead of Angola building a refinery (refineries) while SA is doing same, rather have SA with the expertise construct a new refinery which can service the region...while importing crude from Angola etc

  • Solo - 2010-10-15 09:23

    The Eastern Cape has been waiting for a couple of years now for this project to kick off. These politicians are mucking about, they are know where near kicking off this job.

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