VENTURES AFRICA – The South African national oil company PetroSA is set to partner China’s Sinopec Group to speed up the building of its Coega refinery, Reuters reports.
The project was initially set to cost $9-$10 billion, with a capacity of 400,000 barrels a day. However, reports indicate there might be slight changes to its capacity.
The Mthombo project, to be cited in Coega, an industrial port near Port Elizabeth on South Africa’s south coast, has been in the pipeline for several years but progress has stalled due to a lack of funding.
According to PetroSA, “the agreement defines the process by which PetroSA and Sinopec will shape the business case for Project Mthombo, the initiative to construct a world-class crude oil refinery at Port Elizabeth’s Coega Industrial Development Zone”
The first phase of the agreement will focus on building a business case for the plant, while the second will consider engineering and design. Sinopec, China’s second-largest oil and gas producer is to complete both studies over the next 18 months.
As part of its investment in Africa, China has set aside $20 billion to invest in South Africa’s energy sector, part of its growing presence on the continent.
Two years ago, acting PetroSA chairwoman Linda Makatini told Reuters the firm was in talks with Sinopec and was looking to sell up to 30 per cent stake in equity in the proposed refinery.
According to Reuters, PetroSA is trimming the originally planned capacity of the plant, which is supposed to be among the largest in sub-Saharan Africa, to reflect domestic demand and possibly to reduce its price tag.
South Africa is a major importer of crude, most of it from Iran and Saudi Arabia. However, sanctions on its trade relations with Iran have seen business between the two countries wane.