Surge in fuel imports batters SA’s shrinking refining industry

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Covid-19 has squeezed refiners’ margins while a pending clean-fuels policy is likely to increase their costs as they upgrade machinery

A chimney flares at PetroSA's Mossgas facility in Mossel Bay. Picture: THE TIMES

The shrinking refining industry could add to job loses in a country already facing a 30% unemployment rate. The pandemic has squeezed refiners’ margins while a pending clean-fuels policy is likely to increase their costs as they upgrade machinery. SA imported 135,000 barrels a day of clean fuels in 2019, and shipments are expected to rise 16% in 2020, according to energy consultant Citac.

The oil major is also a partner with BP in SA’s biggest processing facility, Sapref. The refinery is not among the six hubs that Shell plans to retain, and the company is “currently reviewing our shareholding,” a spokesperson said. SA announced a Clean Fuels II policy in 2012 to cut sulfur levels in petrol and diesel. While the rules haven’t yet been implemented, they could affect refinery configuration when they’re enforced. Sasol declined to provide an update regarding Natref, saying that it doesn’t comment on commercially sensitive processes or market speculation.Amid the gloom, there has been a rare investment in the sector.

 

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