CONSTRUCTION of the multibillion-rand oil refinery at Coega could begin next year as oil company PetroSA said yesterday it planned to launch its feasibility study on the project this year.
The R81-billion Project Mthombo has already been delayed by a year, but PetroSA spokesman Tumoetsile Mogamisi said the company only recently reviewed its final business case – compiled jointly with Chinese state-owned energy company Sinopec.
The 36000 barrel-a-day refinery – which will be the biggest in Africa once operational – is expected to create thousands of jobs in the Eastern Cape.
He said the study was likely to take more than 12 months to complete, which meant if the project was given the green light, construction could only commence at the earliest next year.
"There is a lot of planning involved in developing and executing a refinery. Therefore, the feasibility study will give us an indication of when construction will start," Mogamisi said.
PetroSA is also unable to address concerns about the distribution of the refinery's products until the study is completed.
Mogamisi said the plan for now was to ship the products to KwaZulu-Natal and from there utilise the new multi-product pipeline to deliver to what is believed to be Project Mthombo's biggest domestic market, Gauteng.
"The possibility and viability of a complementary pipeline [from Coega] is subject to further investigation. Project Mthombo is engaging various stakeholders to provide further details."
Mogamisi said he believed the project was commercially viable and therefore it would be able to utilise project financing for the refinery and supporting infrastructure, including a pipeline.
Nelson Mandela Bay Business Chamber president Mandla Madwara said another major market was southern Africa and the Southern African Development Community (SADC).
"Coega is an excellent location for a refinery of this magnitude and it is on the world's main trading routes. It is a central location which can easily supply the ports of Cape Town, Mossel Bay, East London and Durban."
Although the project is set to have many benefits for the Eastern Cape, including 27500 jobs during the construction phase, 18500 during the operational phase and 1000 to 2000 permanent positions, cheaper fuel for the region is not one of them.
"Since South Africa is a regulated market, prices are predetermined via the basic fuel price method. Therefore the Eastern Cape will not enjoy special benefits of cheaper pricing," Mogamisi said.
But he said the benefits outweighed the costs since the project would deliver not only on its financial commitments, but it would also yield macro-economic benefits for the country including job creation, supplier development and security of supply.
Madwara said the driving force behind the project was that the refineries operating in South Africa were 40 to 50 years old, running at low efficiencies with old technology and low standards.
"The refinery will ensure that petroleum products meet the highest global standards."
He said the growth in demand was evident from the recent jet fuel shortages which had threatened to ground major airlines.
Nelson Mandela Bay Ratepayers' Association chairman Kobus Gerber said the delays in the project were worrying. "The region needs mega-projects like the oil refinery, but it always seems whenever there is interest, very few materialise," he said.