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SA’s petroleum industry warns refinery fleet could become obsolete

As it looks to extend the timing of new government rules meant to reduce sulphur emissions from 2023 to a later date.
Image: Bloomberg

South Africa’s petroleum refinery capacity could become obsolete within two years, an industry body warned on Monday, as it looks to extend the timing of new government rules meant to reduce sulphur emissions from 2023 to a later date.

The South African Petroleum Industry Association (SAPIA), which represents major oil companies, including BP and Shell that operate local refineries, has been in discussion with the government for years trying to resolve a stumbling block over financing the upgrade of six refineries to cleaner fuels.

In January, SAPIA warned that the impact of Covid-19 meant it was unlikely oil firms in South Africa would upgrade refineries at an estimated cost of $3.9 billion, unless the government allowed them to pass the costs on to consumers or offered some sort of financial support.

The government gazetted new Petroleum Products Specifications and Standards in August that mandate the use of ultra-low sulphur petrol and diesel products from September 1, 2023.

“SAPIA is of the view that the very short time frame provided for implementation is impossible to meet and will likely render the refinery fleet obsolete within two years,” the industry body said in a statement.

SAPIA said it was in discussions with the Department of Energy to amend the regulations so that a “mutually acceptable” implementation date could be agreed, with a financial support mechanism key.

“Without a financial support mechanism, it would be difficult to justify the refineries’ upgrade,” said SAPIA.

Officials from the energy department did not immediately respond to queries.

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And while these refining companies kick the can down the road, we have to sit with poor grades of petrol that pollute our air.

Let the switch to electric vehicles continue apace so we can finally bypass this highly destructive industry altogether!

The nerve of these oil companies. They expect. Government to pay for their Capex!

You really do not have a clue what you are talking about. Refineries are a costly entity to run. The perception that they make big profits is incorrect. Most South African Refineries are outdated and cost to upgrade is huge.

That is why one of our Refineries is down and imports finished products and others will follow the same way.

Retired Refiner

WJS

End of comments.

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