South Africa's 360,000-Barrel-Per-Day Refinery Project with Sinopec Nearing Closure

---

Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Project Mthombo, South Africa's plan for a 360,000-barrel-per-day oil refinery project, has taken a major step forward with the signing of a two-year framework agreement between the country's national oil company PetroSA (Cape Town) and the major state-controlled Chinese petrochemical group Sinopec (NYSE:SNP) (Beijing).

A feasibility study will be launched following the framework agreement, and South Africa's Industrial Development Corporation (IDC) has been brought into this phase of the project's development to reinforce options for project funding.

Although PetroSA is being somewhat coy about project specifics, previously reported specifics say that the project will require an investment of $10 billion to $11 billion and that the crude oil feed will come from Angola. The site of the refinery would be the Coega Industrial Development Zone, adjacent to the city of Port Elizabeth on the country's Indian Ocean coast. Some of the reserve on PetroSA's part is that there has been sustained criticism of the project being far away from the country's industrial and commercial hub in the interior province of Gauteng. This viewpoint is balanced by the need to develop the Coega zone and the Eastern Province where it is sited.

If the joint feasibility is completed with a positive outcome the next phase would include regulatory approvals and the approval of front-end engineering design (FEED).

There is a strong possibility that the potential South African and Chinese partners could develop cooperative moves on oil and gas exploration in South Africa and neighboring countries. They also may look at the development and acquisition of storage and logistical infrastructure in South Africa.

If Project Mthobo goes ahead, it would create 27,500 direct and indirect jobs at the peak phase of construction, and 18,000 direct and indirect jobs when operational.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.