Government will consider a public-private partnership (PPP) approach to the establishment of a new oil refinery, along with strong participation from a crude oil producing partner.
And that partner would likely come from the Middle East or West Africa which are currently the source of the majority of crude oil imports, Deputy Minister of Energy, Thembisile Majola, said last week. Energy Minister Mmamoloko Kubayi announced during her budget vote speech that government was considering investing in a new crude oil refinery. She said building the refinery would help South Africa maintain some control over a vital resource which was currently subject to major currency fluctuations and therefore expensive to import.
Highlighting that the country was ready for a majority SA-owned crude oil refinery investment, Kubayi said that the high dependence on import of finished product was not in the interests of energy security and “did not advance local industrialisation”.
She would approach Cabinet in the third quarter of this financial year for a “firm” decision on this, she added.
National oil company PetroSA – which is reportedly in financial crisis – widely touted the idea of building an oil refinery with a capacity of up to 400 000 barrels a day to lessen the country’s dependence on imports about two years ago, but government was not convinced.
However, with South Africa’s oil import bill continuing to climb, Kubayi said the need for a local oil refinery was becoming urgent, adding that South Africa’s energy security should also be on behalf of its landlocked neighbours on the continent. This could provide opportunities for cross-border logistics operators as well.
The latest figures from the South African Petroleum Industry Association (Sapia) show that South Africa currently imports about 60% of its oil.
Sapia chairperson Shashi Rabbipal was confident that SA had the logistics capacity and capability to deal with the storage and distribution of locally produced oil. “The infrastructure is already there for imported oil,” she said.
