June
2016
HYDROCARBON
ENGINEERING
20
diesel demand surpassed gasoline demand, growing to
226 900 bpd in 2014 (47% of the total) while gasoline demand
grew to 195 500 bpd (40% of the total). Demand for paraffin,
fuel oil and LPG all declined over the 2004 - 2014 decade,
while jet fuel demand grew at 0.6%/y. Over the period
1988 - 2014, demand for these fuels grew at 2.3%/y on average.
Crude imports and processing
With such a small domestic crude oil industry, South African
refiners depend on imported crude feedstock. Figure 7 shows
the level of crude imports from 2002 through 2014. The
volumes are typically in the vicinity of 400 000 bpd, falling as
low as 362 000 bpd in 2011 and rising as high as 508 000 bpd in
2009. In 2014, South African crude imports averaged
431 000 bpd. OPEC countries are the main suppliers, led by
Saudi Arabia, Nigeria and Angola. Iran had been a key source of
crude imports, but South Africa cut these imports in order to
comply with international sanctions. Now that the sanctions
have been lifted, there are plans to resume imports of Iranian
crudes.
In the earlier years, reducing crude import dependency
was one of the key motivations behind the development of
the CTL and GTL industries. Because the CTL and GTL plants
are such an integral part of South Africa’s fuel supply, they are
typically listed as refineries. The Sasol plant is given a
nameplate capacity of 150 000 bpd oil equivalent, and the
Mossgas plant’s nameplate capacity is 45 000 bpd oil
equivalent, but it is currently rated at 36 000 bpd crude
equivalent.
The construction of traditional, crude-based refineries was
not encouraged, though investments at the existing refineries
were needed in order to meet tighter specifications for
product quality. There are four refineries:
n
n
Caltex Oil SA, (CALREF), Cape Town, 110 000 bpd, relying
upon catalytic cracking and visbreaking.
n
n
Engen Petroleum Ltd, (ENREF), Durban, 135 000 bpd,
relying upon catalytic cracking and visbreaking.
n
n
National Petroleum Refiners of South Africa Pty Ltd
(NATREF), Sasolburg, 108 500 bpd, relying upon catalytic
cracking and hydrocracking.
n
n
Shell and BP PLC Petroleum Refineries Pty Ltd, (SAPREF),
Durban, 165 000 bpd, relying upon catalytic cracking and
coking.
South Africa’s total crude capacity is 518 500 bpd. As
noted, there is a plan known as Project Mthombo to build a
grassroots refinery. It is envisioned as a 300 000 bpd full
conversion plant, geared toward Middle Eastern sour crudes.
At that time, the government was growing more concerned
about the rising level of gasoline imports, and was resigned to
allow a higher level of crude imports in order to have greater
refined product self-sufficiency and to capture value from
having a new refinery complex built.
Product imports
Plans to build the Project Mthombo refinery were based
partly on the perceived need to reduce dependence on
imported gasoline. The market has changed since the plans
were initiated, however. As noted above, the demand pattern
has shifted away from a gasoline dominated demand barrel to
a diesel dominated structure. In 1994, gasoline had accounted
for 54% of the six key fuels, while diesel had accounted for
29%. By 2014, however, gasoline’s share had fallen to 40%, and
diesel’s share had risen to 47%.
Figure 8 illustrates the impact of this demand shift on
South Africa’s refined product imports. In 2007, gasoline
imports were 29 600 bpd. They rose to 42 300 bpd in 2011, and
many forecasts expected that this trend would continue
upwards. Instead, gasoline demand grew slowly, and imports
were cut by more than half, from 42 300 bpd in 2011 to
20 100 bpd in 2014. In contrast, diesel imports were
47 500 bpd in 2007, and they declined to 39 400 bpd in 2009.
From 2009 to 2014, however, diesel imports began to grow,
and they averaged 85 100 bpd in 2014.
SAPIA summarised the product balance for gasoline,
diesel and jet fuel, and Figure 9 presents the overall picture
for 2014. Refinery production of gasoline was 180 600 bpd.
Demand was 195 500 bpd. The shortfall was 14 900 bpd.
Kerosene/jet fuel production was 50 100 bpd, slightly above
demand of 47 500 bpd, resulting in a surplus of 2600 bpd.
Diesel production was 157 900 bpd, versus demand of
226 900 bpd. The net shortfall was 69 000 bpd. This
constitutes a sizeable portion of total demand. It also
changes the outlook for the possible grassroots refinery,
since building a diesel maximising refinery is more costly
than building a gasoline maximising refinery. The new refinery
is not yet firm, nor is its downstream configuration, but if the
refinery is intended to satisfy local requirements, it would
have to be a full conversion hydrocracking refinery capable
of producing a full output slate of Euro standard fuels, and
this will be a costly venture.
Conclusion
South Africa’s oil and gas industry has a unique history,
constantly overshadowed by the coal industry, and, in fact,
having coal as a key source of gas and liquids. The Apartheid era
forced the industry to operate in growing isolation from the
rest of the world. This fed the country’s determination to seek
self-sufficiency in its energy supply. South Africa soon led the
world in CTL and GTL technologies, and its expertise has
contributed to other commercially successful plants around the
world. But the next wave of CTL expansion in South Africa has
been stymied by concerns over coal use and carbon emissions.
Additional GTL projects are stymied by a lack of
commercially successful natural gas fields. Shale gas reserves
are huge, but capital and water intensive projects are not
likely in the near term, while very little conventional crude oil
has been found and successfully developed. So the country is
at a crossroads in terms of deciding what types of energy
investments will best meet its future needs.
In the near term, with global crude oil prices at a low
ebb, South Africa appears resigned to let import
dependence rise once again. The advocates of grassroots
refinery expansion believe that relying on crude imports will
be preferable to relying on refined product imports. The
economics are not clear, however, because global refinery
capacity is ample at this point in time. South Africa is far
from most major refining centres, however, and must source
its gasoline and diesel from distant ports. The choices are all
capital intensive: new offshore oil and gas field
developments, a new full conversion refinery, new CTL, new
GTL, new shale gas, new pipelines, and so forth. None seem
to make immediate economic sense in today’s market.
South Africa, however, has in the past shown determination
to improve its energy self-sufficiency, so it would not be
surprising to see the country take action to further develop
its oil and gas industry.
