Oil Looks Ahead to 2020
South Africa’s national oil company, PetroSA, says as a state-owned entity it needs to ensure that it is not reliant on a single source of income.
PetroSA CEO, Ms Nosizwe Nokwe said this when she was briefing the Portfolio Committee on Energy on the company’s annual performance plan and strategic plan for the period 2012/13 to 2015/16.
In her presentation, Ms Nokwe said PeroSA’s wants to supply a quarter of the country’s liquid fuel needs by 2020. “Our strategic objective is to be a sustainable, fully integrated and commercially competitive national oil company supplying at least 25% of South Africa’s needs by then. To ensure sustainability and growth we are focusing on two projects, namely Ikhwezi and Mthombo,” she said.
Project Ikhwezi will play an instrumental role in sustaining the life of the gas-to-liquids (GTL) refinery in Mossel Bay while Mthombo is a PetroSA initiative. Its primary goal is to build a world-class crude refinery in the Coega Industrial Development Zone in the Eastern Cape.
On completion, Mthombo will be the biggest crude refinery in Africa and it will help secure the country’s future fuel requirements. Mthombo will help bring much needed investment and job opportunities to the Eastern Cape area, which is facing significant socio-economic challenges.
In response, members of the Committee expressed conflicting views about the new project.
“I am encouraged by the stance that PetroSA has taken on project Mthombo,” said Mr Koena Moloto. “According to a KPMG report released in 2009, the last time a new complete refinery went operational in the United States of America was in 1976. The report said that during the period from 1981 to 2008 a number of US refineries declined by over 50%. It’s important for us not give up on Project Mthombo because the challenges that are outlined in this report are quite serious,” Mr Moloto said.
Quoting mainly from the National Development Plan another Committee member, Mr Lance Greyling, expressed a different view. “Refining margins are quite low and are likely to remain so for another decade given the surplus in refined products. If this assumption is valid, South Africa will have to export the surplus product at a loss, covered by local fuel consumers, through the basic fuel price.
“This is unfair, politically risky and economically reckless. It highlights the importance of considering alternatives. The NDP is saying instead of building Mthombo, we should consider importing more refined products,” said Mr Greyling.
The Chairperson of the Portfolio Committee on Energy, Mr Sisa Njikelana, said the briefing by PetroSA raised pertinent issues regarding the industry’s outlook and plans. He proposed that the Committee members have a roundtable discussion with the various stakeholders on the issues raised in the meeting, especially concerning the NDP.
by Yoliswa Landu