Mantashe wants private investors for Sapref refinery rebuild

The department of mineral & petroleum resources wants to build up the Sapref refinery in Durban, which the state-owned Central Energy Fund bought for R1 in May, to increase SA’s refining capacity.

Minister Gwede Mantashe said at a briefing on Wednesday that private investors would be sought to help develop the plant, rather than relying on the Treasury for finance.

The country’s limited refining capacity has been a source of concern to the government as the country has to import refined petroleum products.

Sapref, SA’s largest refinery, was jointly owned by BP SA and Shell. The plant has a capacity of 180,000 barrels a day and is responsible for about 35% of the refining capacity in SA when it is fully operational.

Operations at Sapref have been on hold for more than two years after the two companies announced in February 2022 they were implementing a spending freeze and pausing operations until a decision was made on the future of the plant.

“We are looking at reviving Sapref and new refining capacity at PetroSA,” Mantashe said, referring to the mothballed gas-to-liquid plant in Mossel Bay.

“We want to rebuild Sapref into a refinery. We are worried about the decline in refining capacity of the country. If we don’t have refining capacity the risk is very high. We can’t afford to be dependent on imported finished goods in the petroleum sector. This is what is preoccupying us.”

While there have been reports that TotalEnergies would abandon its gas find off the SA coast to prioritise exploration near Namibia, the gas deposit would remain, Mantashe said. PetroSA also owns offshore exploration blocks.

“Total has not confirmed to us that they are leaving. They have raised issues but we know that they are also interested in somewhere else in SA. It is not a company that is leaving SA; it is a company that is looking at options and how it can optimise its returns.”

On mining, Mantashe noted the sector was predominantly black-owned and all major companies (nine were researched) did not have less than 50% of black managers at all levels of management.

Mantashe said the planned cadastral system, which is expected to go live at the latest in June next year, would assist in dealing with backlogs and allow for the transparent allocation of applications for permits and licences.

Director-general Jacob Mbele said implementation of the cadastral system had begun, but finalisation would take a long time as the data had to be uploaded. The department would work from province to province in this regard.

On backlogs, deputy director-general Tseliso Maqubela noted in the past financial year the department received 4,310 applications, so it was chasing a moving target. As applications were being processed, more were coming in.

As at June 15, the department of mineral & petroleum resources had 148 new mining right applications, 1,563 prospecting applications and 1,500 mining permits (for coal) from Mpumalanga.

Most of the latter would not succeed as there are already mining rights allocated over the sites applied for.

ensorl@businesslive.co.za