PetroSA awards contract for South African refinery

Uchenna Izundu
International Editor

LONDON, Dec. 8 -- PetroSA has let a feasibility and front-end engineering and design contract to KBR for its 400,000 b/d refinery in the Coega industrial development zone outside Port Elizabeth, South Africa. The value of the contract was not disclosed.

The award builds on the prefeasibility study that KBR carried out for Project Mthombo earlier this year (OGJ Online, Nov. 11, 2008). KBR will start the work in December, and operations at the $11 billion refinery, which will be Africa's largest, are expected to start in 2014.

Feasibility studies will be completed in September 2009, and a final investment decision is scheduled for late 2010.

The refinery is of strategic importance to South Africa as national demand for refined fuels has outstripped the nation's refining capacity. Diesel consumption is forecast to grow at 6% and petrol at 2%/year during 2009-20.

Sipho Mkhize, PetroSA's president and chief executive, said that if there were no investment in refining capacity, South Africa would have to import 10 billion l. of fuel/year by 2015—equivalent to 20% of the national requirement.

"Importing this much refined fuel will have a negative impact on the country's foreign exchange reserves and makes national supply very vulnerable to external factors," Mkhize added.

KBR will work with PetroSA to outline a competitive supplier development program to stimulate economic growth, jobs, and skills development in the eastern Cape under the industry liquid fuels charter.

Contact Uchenna Izundu at uchennai@pennwell.com

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