Following South Africa’s long-anticipated cleaner fuels programme, Sasol began a review of its 108 thousand barrels per day (MBPD) Natref refinery and its 150MBPD Secunda plant. When the review did not turn out as expected, Sasol noted that a sale of Natref would be considered if that is the most economical option.
According to Sasol’s co-CEO Bongani Nqwababa, “The technical solution doesn’t currently make the adequate returns we need, so more work is required as to what are the solutions.”
South Africa’s clean fuels initiative commenced in 2006 and new fuel specifications known as Clean Fuels 1 (CF1) were issued under the country’s Petroleum Products Act, a revised version of South Africa National Standards (SANS) specifications for petrol and diesel.
By 2012, the country announced the Clean Fuels 2 (CF2) policy to cut sulphur levels in gasoline and diesel, however, the rules are yet to be implemented. The CF2 regulations stipulate that sulfur levels in petrol and diesel must remain below 10 parts per million (ppm).
Initially, the Department of Energy (DOE) set the deadline for the introduction of the CF2 program to be July 2017. Unfortunately, this deadline is still being delayed.
The country has six main crude oil processing plants with a total refining capacity of 704 Mbpd. The 180-Mbpd Sapref refinery, a JV between Shell SA Refining and BP Southern Africa, has the largest processing capacity, followed by Sasol’s 150-Mbpd refinery. Despite the processing plants and the country being the 10th oil-producing nation in Africa, it still relies on imports to meet its clean fuel requirements.
As of 2016, South Africa imported about 3.7-billion litres of diesel and just over one billion litres of petrol, a significant amount of these imports were of 50ppm diesel and 95 unleaded petrol, whereas cleaner product variants are manufactured in South Africa although not at levels needed to meet the demand.
Sasol’s 108 MBPD Natref refinery and its 150 MBPD Secunda plant, together account for more than a third of South Africa’s fuel production capacity. Presently, Sasol holds a 64 percent stake in Natref and the remaining 26 percent is owned by Total SA who would also have a say in the decision making of the refinery’s options.
“There is clarity” on the technology required for the Secunda refinery and teams are working on the business case, expected in six months to a year,
The cost of upgrading the existing refineries in the country to meet the Clean Fuel’s 2 specifications is estimated at about R40billion ($2.86 billion) and Avhapfani Tshifularo, the executive director of the South African Petroleum Industry Association had early stated that “South African refineries must be upgraded to be able to produce Clean Fuels 2 otherwise they would die if the products produced have no market.”