South Africa to become more reliant on fuel imports as local refineries face closure

South Africa to become more reliant on fuel imports as local refineries face closure

South Africa will grow even more dependent on imports for its fuel needs as the country’s refining sector faces an uncertain future, says Avhapfani Tshifularo, executive director of the South African Petroleum Industry Association (SAPIA).

In an interview with S&P Global Platts, Tshifularo said all six of the country’s refineries are currently ‘under review’ and some of them “will have to make some very difficult decisions”.

The likely scenario will be to either “to convert a refinery into import or dispose (of) the refinery altogether” instead of an expensive upgrade program, he said.

Tshifularo said that Eskom’s load shedding in 2020 means the country is already in “import mode”, and along with environmental and regulatory pressures, imports are becoming increasingly attractive to meet demand for higher quality fuels, compared to home production.

“Without any financial support they are not going to invest in an upgrade. The world has moved on now,” he said. “If there is any investment, it will be very minimal, and will be done just to stay in the game.”

It could be 75% cheaper to convert a refinery into an import facility than to upgrade it, Tshifularo added.

Almost half of South Africa’s oil refining seen shut until 2022

South African plants owned by Glencore Plc and Petroliam Nasional Bhd that make up 43% of the nation’s oil-refining capacity are expected to stay shut until at least 2022, according to energy consultant Citac.

The closures will force South Africa to rely heavily on fuel imports, Bloomberg reports.

All of South Africa’s oil refineries – with a total capacity of more than 500,000 barrels a day – have had accidents or are under review, with the industry already hit hard by the Covid pandemic.

A pending national clean-fuels policy is also likely to increase costs to upgrade machinery.

Engen said options are being considered for its 120,000 barrel-a-day plant after a local news website reported it’s expected to shut in 2023 and may be converted into a fuel-storage terminal.

If the plan is to close in two years, “it would not make economic sense to invest into bringing it back up,” said Elitsa Georgieva, an analyst at Citac.

-Business tech

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