In a milestone towards the construction of a multibillion-rand oil refinery at Coega, PetroSA and Chinese petrochemical company Sinopec formally agreed yesterday to share the cost, amounting to more than R1.5-billion, of drawing up the blueprint for Project Mthombo.
The signing of the joint study agreement at the Coega Development Corporation (CDC) offices on the outskirts of Nelson Mandela Bay was welcomed as a firm step towards the construction of a refinery in the Eastern Cape by national and provincial government officials, as well as the Nelson Mandela Bay Business Chamber.
It also cements the partnership between the two companies in constructing the $10-billion (R83-billion) refinery.
While cabinet decides whether to allow the pre-development phase to go ahead - called the front-end engineering design (Feed) - the companies will start with a market analysis, costing up to R5-million and taking up to six months to complete.
Thereafter, a business case for the project will be developed, which will take up to 11 months and cost about R50-million, according to PetroSA new ventures vice-president Joern Falbe.
Should cabinet give the thumbs-up for the costly Feed phase, which Falbe said would cost about R1.5-billion, that would go ahead after the two former phases had been completed. The Feed would take about 10 months to complete, after which construction could begin. Falbe said the companies would be sharing the costs of the projects, as undertaken in yesterday's agreement.
Eastern Cape economic development and tourism MEC Mcebisi Jonas said the signing was "an important moment for the province".
"If you look at the history of Coega, it has been a challenging road. People would say it was a white elephant, but these occasions confirm we were right to develop a port and an industrial zone," Jonas said.
"When we started with [talks about Project Mthombo] in 2008, it all seemed like a dream."
Nelson Mandela Bay Business Chamber chief executive Kevin Hustler said Project Mthombo had "the potential to be a major catalyst for socio-economic transformation of the Eastern Cape through employment creation, up- and downstream business opportunities and the development of the associated infrastructure".
Sinopec's foreign cooperation office deputy general manager, Han Shen Deng, said the joint study agreement was "a very important part of our international strategy". The agreement followed the signing of a memorandum of understanding between the two parties in September last year.
PetroSA chief executive Nosizwe Nokwe- Macamo said the agreement signified the beginning of a long-term working relationship.
"It is our expectation that this mammoth project will be a catalyst for industrialisation and economic development for South Africa, but particularly for its host province, the Eastern Cape," Nokwe-Macamo said.
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