OBG talks to Nosizwe Nokwe-Macamo, Group CEO, PetroSA

Interview: Nosizwe Nokwe-Macamo

How difficult is it to secure a reliable inflow of feedstock for refinery activity?

NOSIZWE NOKWE-MACAMO: Despite the country’s importation of large volumes of refinery feedstock, especially crude oil, securing a reliable inflow for its refineries is not considered a challenge. South Africa currently has only a modest amount of hydrocarbon reserves but it has created a sizable downstream industry, where crude oil and gas refineries depend largely on imports.

Sourcing sweet crude oil for our refineries is less of a concern than securing natural gas. PetroSA’s refinery currently sources natural gas domestically and, with offshore explorations under way, we hope to continue doing so. A successful discovery would lessen the need to import feedstock from neighbours such as Mozambique or from elsewhere in the world.

What is the rationale for a new mega-refinery at the Coega Industrial Development Zone?

NOKWE-MACAMO: The establishment of a new megarefinery at Coega is intended to not just produce petroleum products but also to create feedstock for a full petrochemical complex. It is a much bigger vision than just producing diesel or petrol for automobiles and jets, which are currently serviced by existing refineries. Rather, the plan is meant to be the basis for creating a thriving petrochemicals industry as the country continues its efforts to industrialise. Such beneficiation would improve South Africa’s value chain and balance of payments. Right now we import both feedstock and the finished products; with our refining capacity, we cannot continue to do both. A mega-refinery will boost products’ competitiveness and create more jobs. We will be able to service demand from the country and the region.

The Coega project is not intended to replace existing facilities, but to add capacity for future demand, as we expect to be short of refining capacity over the next 20-30 years. Existing refineries should therefore be refurbished to reach full operating capacity, as well as to meet the new Euro V clean fuel specifications. Meeting such standards will provide environmental and efficiency benefits, reducing our carbon footprint. It will also aid the auto-making industry, which looks to produce cars that use clean fuel.

To what extent does South Africa offer potential for producing from unconventional reserves?

NOKWE-MACAMO: There is potential for developing alternative sources of energy as South Africa looks to diversify its energy mix under the Integrated Resource Plan. Shale gas reserves at the Karoo Basin, for example, have the potential to make a significant contribution to the country’s energy security. Producing shale gas, however, can be complex, especially from an environmental perspective due to the use of fracking.

South Africa does not yet have the infrastructure that the US did when its own shale revolution began, so it will be quite a process for us and more of a long-term prospect. In the short term, there is therefore a need for South Africa to develop the necessary infrastructure and markets by way of importing liquefied natural gas (LNG). This will not only serve as a catalyst for shale gas production but also increase the role of gas in the country, as envisioned by the National Development Plan. Apart from LNG importation, there is some offshore oil and gas exploration under way – unprecedented in the country’s history – as well as some onshore drilling. Offshore exploration in deep waters can prove quite complex and expensive, so time will tell how fruitful the results will be for power generation.

Renewable energy – specifically solar and wind – also holds potential and is achievable today. A favourable incentive policy is in place that has attracted both local and foreign independent power producers. It has so far been successful and we look forward to its making a meaningful contribution to the national grid and to micro-grids in rural areas. All of these alternatives will reduce reliance on coal, the main feedstock for power generation, and lead to a more environmentally sustainable balance of energy production in the future.