South Africa's biggest refinery to offer opportunities for black entrepreneurs

Mar 09, 2009 01:00 AM

South Africa's biggest oil refinery, on which work would start towards the end of next year, would provide a host of investment opportunities for black entrepreneurs, Dan Marokane, the vice-president of operations at oil and gas parastatal PetroSA, said. The multi-billion rand project, planned for the Coega industrial development zone near Port Elizabeth, is still subject to feasibility studies.
Mxolisi Landu, PetroSA's chief economist, said that while the bulk of wholesale opportunities would arise only from about 2014, when the project was due to be completed, there would be myriad tasks for small businesses to perform when construction started, including brickwork, steel construction and service provision.

Marokane noted that opportunities for black economic empowerment would arise during the procurement phase, including technology, power supply and the supply of hydrogen and biofuels. This was particularly important for the small scale agricultural sector in the Eastern Cape. While the plant will not refine biofuels, PetroSA will provide support to local farmers to produce biofuels.
Marokane, who noted that PetroSA had met about 100 business people in Port Elizabeth to brief them on progress, said it was envisaged that an independent power producer would be sought to power the refinery, which would need about 200 MW of power. Marokane noted that there would be downstream business opportunities, including investment in tank farms, depots and transport modes including pipelines, rail, road and shipping.

PetroSA chief executive Sipho Mkhize told a briefing in Port Elizabeth that the financial crisis looked set to reduce the refinery's cost from about $ 11 bn (R 116 bn) to $ 9 bn, including reduced material and engineering costs. Mkhize believed that about 27.500 jobs would be created during the construction phase from 2010 to 2014. The operational phase would create 18,500 jobs. This, he said, "unlocks regional growth potential" and fitted in well with the local car and petrochemical industries.
He believed the massively increased domestic refinery capacity would save about R 18.5 bn on South Africa's balance of payments. The plant, to be known as Mthombo, or "fountain", will convert heavy crude to petrol and diesel. The refinery would produce about 300,000 bpd by 2020 with a peak supply of 400,000 bpd ultimately.

Landu said South Africa would have a shortfall of petrol and diesel of about 150,000 bpd by 2014. By 2024 the deficit would be 250 000 bpd. Mthombo's capacity would have to be ramped up considerably between 2015 and 2016.
In 2008 PetroSA awarded New York-listed KBR a R 1 bn engineering contract to draw up the basic design of the refinery, due by September.

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