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The Petroleum Oil and Gas Corporation of South Africa (PetroSA) and the Eastern Cape provincial government spent R200 million on a fuel refinery that was never built, City Press reports.
Dubbed Project Mthombo, the refinery was set to be developed in Gqeberha through a partnership with Chinese oil company Sinopec, but it never materialised.
“Approximately R197 million was spent on various activities such as feasibility studies and legal advisory, which formed part of the project development requirements,” City Press quoted Nkululeko Poya, PetroSA board chairperson, as saying.
However, the project never progressed beyond that.
City Press cited Ayanda Vilakazi, Coega Development Corporation spokesperson, as saying the potential investor in Project Mthombo believed the site wasn’t viable. As a result, the project was terminated.
PetroSA had approached the Coega Development Corporation as a potential investor in 2007.
According to Poya, PetroSA’s current plan is to continue increasing finished product imports that are to be supplied to the South African market.
“There are currently engagements as part of planning the security of energy supply in the country in terms of ensuring that we meet our adequate fuel consumption demand,” he added.
PetroSA’s other focus appears to be developing a gas-to-liquids refinery in Mossel Bay in the Western Cape.
The state-owned oil company announced it was waiting for approval to build the refinery from the National Energy Regulator of South Africa in March 2023.
The project would add 180MW of generation capacity to the grid, and Poya said it could be ready in 18 to 24 months.
If approved, PetroSA will run the generators using tail gas — leftover residue from its oil-to-gas process at its Mossel Bay plant.
“We have gas in our current well domestically. It is sufficient, based on our studies, to be able to power a power plant of the magnitude of 180MW for a period of three to seven years,” said Poya.
The gas and oil refinery market in South Africa has taken a knock in recent years, with BP South Africa and Shell Downstream South Africa suspending operations at South African Petroleum Refineries (Sapref) in March 2022.
The two shareholders of the refinery will implement a spending freeze and pause refinery operations at Sapref to search for a buyer for the refinery.
“This will be for an indefinite period but with a restart possible in the future, including in the event of any future sale,” the companies stated.
Energy minister Gwede Mantashe slammed the decision, saying it threatened South Africa’s plans to establish an upstream petroleum industry to support economic growth and meet energy needs.
Mantashe said the “greed and arrogance” of “certain petroleum entities” closing local refineries and importing their product would result in job losses, cost the economy dearly, and lead to uncertainty of supply.
source:South Africa blew R200 million on fuel refinery that was never built (mybroadband.co.za)
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