PetroSA's plan to build a "world class" $11bn crude oil refinery at Coega in Eastern Cape is aimed at catapulting the South African national oil company onto the international stage.
Jorn Falbe, vice-president of PetroSA's new ventures midstream, said last week that SA needed to get out of the "fix-it" mode, and the Coega project provided the last opportunity to build a refinery which would concentrate on handling heavy crude supplies from the Atlantic region - Venezuela, Brazil and Angola - to maximize returns. This would also reduce SA's traditional reliance on light sweet crude from the Middle East.
The recent visit to SA by Venezuela's President Hugo Chavez had sparked renewed interest in the project, which was expected to be able to refine up to 400000 barrels a year. A mission from SA will visit Venezuela next week, while the Venezuelans will send a team to SA at the same time. The South African team will look into the possibilities of crude oil exploration, while the Venezuelans will be looking at the use of oil bulk storage facilities and details of the proposed refinery.
Falbe, an engineer with years of experience at world oil giant Shell, said the next six months would be critical for the project as it moves into the front-end engineering and design (FEED) phase.
HSBC bank has already been appointed as a financial adviser and the pre-feasibility study has been completed by leading global engineering, construction and services company KBR.
Falbe said PetroSA found itself in the same position Eskom did a few years ago when the government declined to commit major investments into the electricity utility. While the minister of public enterprises was committed to drive the programme forward, a final investment decision was yet to be made.
Falbe said contrary to perceptions, the new Coega refinery would not be reliant on oil supplies promised by Chavez during his recent visit, since it could also count on potential supplies from Brazil and Angola, where similar heavy crude deposits can be found.
The next step in the Coega project would be selecting an engineering partner to complete the FEED study. Falbe said this process was well under way. PetroSA had initially started with 30 potential partners but these were reduced to eight and have been further whittled down to four.
Falbe did not want to identify the parties at this stage but did say they were "global players -- the world's best".
Falbe said the opportunity to build the refinery, which would be strategically placed to serve the rapidly growing Indian and Chinese markets, apart from Africa, was "now".
"It's now or never," he said.
(C) 2008 AllAfrica.com. All Rights Reserved