South Africa, which buys nearly a third of its fuel requirements from overseas, is undergoing a surge in imports with the refining industry walloped by the coronavirus and anticipated clean-fuel regulations.
There are questions around the fate of five of the country’s six facilities. PetroSA’s 45,000 barrel-a-day plant is expected to run out of natural gas feedstock next month and Glencore Plc’s Cape Town refinery has been shut since February. Combined they would take over a fifth of the nation’s processing capacity offline. Petroliam Nasional Bhd, Sasol Ltd. and Royal Dutch Shell Plc are reviewing their plants.
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. Africa’s most industrialized nation imported 135,000 barrels a day of clean fuels last year, and shipments are expected to rise 16% in 2020, according to energy consultant Citac.
“It goes without saying that if we lose current refinery capacity, more products will be imported to ensure security of supply,” said Avhapfani Tshifularo, executive director of the South African Petroleum Industry Association. The trade body is in talks with the government about challenges “such as demand destruction due to the Covid-19 pandemic, pressure to decarbonize and low refinery margins.”
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