Saudi Arabia’s Saudi Aramco plans to build an oil refinery and petrochemicals plant in South Africa as part of US$10 billion of investments in the country. Joint studies for a refinery and petrochemical complex will be conducted by Aramco and South Africa’s Central Energy Fund, according to recent news reports.
The negotiations mark a step forward in South Africa’s plans to add a refinery, which it has been considering for about a decade. The new refinery would reduce the need for refined product imports and cement Saudi Arabia’s dominant position in South Africa’s oil sector. The former already supplies 40% of the crude oil consumed in South Africa.
Meanwhile, South African Energy Minister Jeff Radebe said a location for the refinery and petrochemicals plant would be finalised in the coming weeks. The capacity for the refinery is yet to be determined. The two governments are considering Richard’s Bay in KwaZulu-Natal province, home to South Africa’s major coal export terminal, among potential locations for the refinery.
Saudi Arabian state-owned oil giant Saudi Aramco is also studying whether to use South African oil storage facilities in Saldanha Bay, while Saudi power firm Acwa Power is looking at investing in South Africa’s revamped renewable energy programme.
South Africa has talked about building an extra refinery for a decade, but it has struggled to agree commercial terms with investors.
It has six refineries, four using crude oil and two synthetic fuel as feedstock. Royal Dutch Shell, BP , Total and Sasol are among major refinery operators.