PetroSA, South Africa's national oil company and operator of the world's first gas-to-liquid (GTL) refinery at Mossel Bay, is set to construct a R39-billion crude oil refinery in Coega near Port Elizabeth. Dubbed Project Mthombo, the proposed crude oil refinery is expected to produce about 200 000 barrels of fuel per day and will come on stream in 2014/2015. The name symbolises the fountain from which South Africa is to grow.

"Project Mthombo will be one of the biggest post-2010 investments in South Africa. It is estimated that the project will generate about 1000 direct jobs during operations and 5 000 to 15 000 during construction. This project will also significantly improve South Africa's fuels import bill," PetroSA Chief Executive Officer Mr Sipho Mkhize announced today. "This project will further redefine South Africa's energy landscape. The demand for automotive fuels in Southern Africa already exceeds the local production capacity and South Africa is becoming increasingly dependent on the import of refined automotive products.

"Based on the current rate of demand growth, the demand for fuel in South Africa will justify a new crude oil refinery within the next 5 to 7 years. This is why PetroSA is investigating the possibility of building a 200,000 plus barrels per day multi-billion rand crude oil refinery," said Mr Mkhize. The Energy Security Master Plan, released by the Department Of Minerals and Energy recently, recommends that PetroSA procure at least 30% of all crude oil consumed in South Africa. The initiative by PetroSA to build a new crude refinery is in direct response to this mandate.

Coega was chosen as the site for the proposed new refinery after a thorough and independent screening of five potential locations around South Africa. Coega offers world-class infrastructure, is ideally located near growing demand centres in the Eastern and Western Cape and has sufficient land available for secondary industries to develop around the refinery. The industrial zone also provides the strategic flexibility to mitigate the risk to South Africa's security of supply by reducing the reliance on the traditional refinery and import centre. Once the technical specifications and commercial aspects of the project have been clarified, the final investment decision will be made around 2010/11.

"PetroSA believes that strong and complementary partnerships will be required to realise a project of this size and nature, to mitigate any project related risk and to enhance the commercial and financial viability of the project.

"These partnerships will be established across the crude refining value chain, from the supply of crude oil, through the erection and operation of the refinery to the distribution and marketing of the automotive products. PetroSA is already in discussion with various potential partners to help bring Project Mthombo to fruition.," said Mr Mkhize.

Project Mtombo and other projects that PetroSA has identified and is pursuing,will go a long way to improve South Africa's security of energy supply and reduce South Africa's dependency on imported automotive fuels. "South Africa's economic growth will be promoted and enhanced by the sustainable and competitive supply of automotive fuels. Once again PetroSA will lead industry and create an opportunity to achieve government's strategic growth, transformation and security of supply objectives," the PetroSA CEO concluded.