Energy

Big changes at South Africa’s biggest fuel refinery

South Africa’s state-owned Central Energy Fund wants to manage petrochemical assets at the nation’s biggest fuel-storage hub after it bought the country’s largest fuel refinery that’s adjacent to the facility last year.

The CEF purchased the 180,000-barrel-a-day Sapref plant from Shell and BP and has asked the National Department of Transport to allow it to take over operations at Island View in the eastern port city of Durban so that the refinery can be “financially viable” the department said in a reply to questions. 

The CEF has applied for the change under section 79 of the National Ports Act, which allows the transport minister to designate assets to safeguard the country’s national security. 

South Africa is a net fuel importer. It brings in 61% of its needs, compared with only 22% in 2019 because multiple refineries have shuttered operations due to a combination of industrial accidents and the approach of new low-sulfur fuel standards that require greater investment in aging plants. 

The Island View precinct — currently managed by state-owned logistics company Transnet — is a crucial part of the energy chain, with virtually all shipments of petroleum products into the country moving through its berths and storage tanks before feeding into the national pipeline network. 

The CEF bought Sapref — now housed in the South African National Petroleum Co. — for a symbolic 1 rand (five US cents) after Shell and BP stopped processing there in 2022.

Severe flooding subsequently submerged the facility in as much as 3 meters (10 feet) of water. 

The fund plans to repair the refinery and increase its capacity. The Sapref sale didn’t include BP and Shell’s terminal at Island View.

Transnet National Ports Authority in November said it appointed Zutari, an infrastructure adviser, to revise a plan originally approved in 2019 to update the port.

TNPA is finalizing the Island View strategy for approval by the government, the transport department said. 

The ports authority said “the state is a critical stakeholder and has expressed interest in several TNPA infrastructure initiatives through the Central Energy Fund.” 

The CEF declined to comment on the matter. It reported a loss of R522 million in the year through March 2024 from a profit of R1.77 billion a year earlier “driven by a combination of external-market pressures, internal operational inefficiencies and increased costs,” it said in its annual report. 

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