SA refineries need N$40 billion for clean fuels

JOHANNESBURG – Refineries in South Africa will need to spend N$40 billion (US$4,95 billion) to upgrade facilities to conform with cleaner fuel specifications, a senior executive of petrochemicals group Sasol said yesterday.

Sasol Executive Director Benny Mokaba said the upgrades necessary to comply with the new specifications, which South Africa has said it wants to introduce by 2012, exceeded the companies’ balance sheets.
‘Refineries cannot afford to put in the equipment that is required … that’s 40 billion rand that doesn’t add an additional litre,’ he said.
South Africa currently produces fuel according to the Euro 2 level emission standards, while European countries have moved to Euro 5, one with lower nitrogen oxides and particulate matter emissions.
Companies have asked for a five-year delay to be able to comply with the Euro 4 requirements.
Mokaba said the government should adopt a phased-in approach, to ensure the drive to push for cleaner fuels does not jeopardise the country’s economic growth by reducing its already stretched fuel supply.
‘In the next 10 years, we will be hard pressed to supply ourselves with liquid fuels. Our projection is that by 2014-15 we will need close to eight billion litres imported into South Africa,’ Mokaba said.
South Africa faces a fuel capacity shortage, especially when refineries are forced to shut down unexpectedly.
Relief will come if the 400 000 barrels-per-day (bpd) Coega oil refinery, built by state-owned PetroSA and following cleaner fuels specifications, comes on stream as planned in 2015.
Until then, additional imports due refinery shutdowns would harm South Africa’s current account and cut jobs, Mokaba said.
‘We may be environmentally right, but then harm our economy so badly that we find that even the benefits of the environment are reversed by the consequences,’ Mokaba said.
New Energy Minister Dipuo Peters said in May she would seek clean fuel specifications for South Africa in line with the rest of the world. South Africa’s refineries include Engen’s 135 000 barrels-per-day plant and Sapref’s 180 000 bpd facility, jointly owned by BP Plc and Royal Dutch Shell.
A ministry official said yesterday that while the country has failed in the past to form an integrated energy policy for the country, taking into account the diverging interests, it wanted to improve its collaboration with the sector to achieve energy security in a sustainable manner.
-Nampa-Reuters