The Manufacture of Petroleum and Lubricants

This report focuses on the liquid fuels sector of the South African economy which contributes around 3% to GDP and has R94bn in assets. Of the country’s six ageing refineries, four produce refined petroleum products from imported crude oil, while the remaining two produce liquid fuels synthetically via the Fischer-Tropsch process. As they are all manufacturing at capacity, 20% of the country’s refined petroleum product needs have to be imported.

Investment Decisions

Analysts confirm that two large investment decisions need to be made in the short-term. The first is environmental, with the country needing to meet the so-called Euro V standards. However, the cost to upgrade the ageing refineries is R40bn in 2010 terms. The second issue centres on security of supply: whether local production will be increased and how much the country will rely on imported refined petroleum products. PetroSA intended developing a 360,000-barrel-a-day new refinery at Coega at a cost of US$11bn, but this is unlikely to happen given the state utility’s loss for the 2014/15 financial year expected to reach R14.9bn. The gazetting by the Department of Mineral Resources of the final regulations to control the exploration and production of oil, gas and hydraulic fracturing in early June 2015 means that applications to explore for shale gas in the Karoo are likely to be processed in the near future.

Report Coverage

The Manufacture of Petroleum and Lubricants focuses on the current state of the domestic industry, the challenges it faces and government attempts to support the sector. The report also profiles 38 industry players, including national oil company PetroSA that employs 1,681 people, and multinational subsidiary BP Southern Africa (Pty) Ltd which is involved in the wholesale and retail of petrol, the blending of lubricants and the production of LPG.