Refinery woes raise imports

CLEAN FUEL: FATE OF 5 SA PLANTS UNCERTAIN

South Africa, which buys nearly a third of its fuel requirements from overseas, is undergoing a surge in imports with the refining industry hit by the coronavirus and anticipated clean-fuel regulations. There are questions about the fate of five of the country’s six facilities.

PetroSA’s 45 000 barrel-a-day plant is expected to run out of natural gas feedstock next month and Glencore’s Cape Town refinery has been shut since February.

Combined they would take over a fifth of the nation’s processing capacity offline.

Petroliam Nasional Bhd, Sasol and Royal Dutch Shell are reviewing their plants.

The shrinking refining industry could add to job losses in the country.

The pandemic has squeezed refiners’ margins while a pending clean-fuels policy is likely to increase their costs as they upgrade machinery.

The country imported 135 000 barrels a day of clean fuels last year, and shipments are expected to rise 16% this year, according to energy consultant Citac.

“If we lose current refinery capacity, more products will be imported to ensure security of supply,” said Avhapfani Tshifularo, executive director of the SA Petroleum Industry Association, which is in talks with the government about challenges.

Refineries around the world have been hit hard by the Covid crisis, slamming profitability as Europe and America grapple with deep economic trouble.

Shell this month said it would shut the Convent refinery in Louisiana as it focuses on six hubs globally, and couldn’t find a buyer for the US plant.

The oil major is also a partner with BP in SA’s biggest processing facility, Sapref.

The refinery is not among the six hubs Shell plans to retain and it is “reviewing our shareholding”, a spokesperson said.

Output at PetroSA’s 45 000 barrel-a-day Mossel Bay gas-to-liquids plant may cease completely next month with gas fields nearing the end of their life.