PetroSA on Tuesday announced that a pre-feasibility study into the planned multi-billion rand crude oil refinery in Coega, Port Elizabeth, has been completed."Planning for the new refinery is now well under way. Configuration design is also well advanced and we have now begun discussions with several international and local parties regarding potential financial and operating partnerships," said PetroSA Chief Executive Officer Mr Sipho Mkhize.
"Economics for the project look very encouraging and the World Bank recently has also indicated support for the concept."

The study, which was completed by a leading US-based refinery specialist KBR, in conjunction with local project engineering company, Ilitha, was presented to PetroSA at its head office in Cape Town on Monday.

"Production is planned for a product mix of up to 70% distillates (diesel & aviation fuel) and 30% high octane gasoline. These fuels will meet the highest Clean Fuels (Euro V) specifications in line with anticipated legislation.

"Bio-fuels and petrochemicals opportunities are also included in the design parameters. With the high quality of fuels produced, a world class configuration ready to process challenging cheaper crudes, export opportunities will also be economically attractive," said Mr Mkhize.
Mr Mkhize revealed that capital costs for the 250,000 bbl/d base case are estimated at $6-7 billion. This is in line with observed international costs for world class refineries of such magnitude and complexity."

Earlier this year, the Coega Development Corporation selected PetroSA as preferred investor for a refinery in the Coega IDZ.

"The decision to locate the refinery at Coega is based on commercial drivers but also considers national interest factors such as unlocking growth potential in a region with one of the lowest economic activities in the country and providing a strategic alternative to Durban which presently handles 75% of the country's crude imports and 40% of refined products.
"Environmental issues at all other possible locations also play a major role in this decision," said Mr Mkhize.

The South African Department of Minerals and Energy (DME) has gazetted the Energy Master Plan which supports an additional crude refinery to address the rapidly-increasing shortfall of locally refined products for the SA economy.
Such a crude oil refinery would also assist in reducing the balance of payment pressures that result from South Africa's growing dependence on refined products imports.

The base-case 250,000 barrel per day refinery will be a world class facility designed to be self-sufficient in power generation with global best practice standards applied to emissions and water management.

Two additional scenarios are being investigated -- increasing capacity to 400,000 bbl/d and 600,000 bbl/d. Both cases would offer significant opportunities for foreign direct investment.

"This crude refinery will be the lowest cost, high quality fuels producer in the African continent. In support of the planned refinery and national supply network as laid out in the DME's Energy Master Plan, PetroSA's planning includes the provision of new oil terminal facilities and upgrades at Cape Town, Mossel Bay, Port Elizabeth, Durban and Gauteng.

The refinery is part of a holistic strategy to ensure that the current unsustainable and urgent national fuels supply scenario is reversed and secured – we cannot afford a liquid fuels crisis in South Africa," concluded Mr Mkhize.