MOSCOW (MRC) -- South Africa has agreed "in principle" to the construction of a new refinery backed by Saudi Aramco though the timing for the project remained unclear, reported S&P Global with reference to South Africa's energy and minerals minster's statement.
"In principle, we have agreed to it," Gwede Mantashe told reporters on the sidelines of an industry event in Cape Town.
"What is left now is to see contractors on site. I will only be convinced when the contractors are on site."
South Africa and Saudi Arabia reached a framework agreement for a new refining and petrochemicals complex in January as part of Saudi Arabia's USD10 billion investment plan for South Africa.
Mantashe said the government has agreed with Aramco's plan to build the plant at Richards Bay in the northeast despite the government's preferred site being Coega in the Eastern Cape. He gave no further details on the scale of the plant which would reduce South Africa's need for refined product imports.
South Africa imports around 40% of its crude requirements from Saudi Arabia.
Saudi Aramco is also looking to diversify its crude storage options by using the Saldanha Bay terminal in South Africa with a capacity of around 50 million barrels and between demand centers in Asia and Europe.
As MRC informed previously, Saudi Aramco, which temporarily lost half of its oil production following the September 14 attacks on two key oil facilities, is running its local refineries at full capacity and is forging ahead with plans to start up new refineries. The company is also starting up a joint venture refinery in Malaysia next year. According to Aramco's bond prospectus released in April, the refining and petrochemical joint venture with Petronas - the Malaysian national oil company - collectively known as PRefChem, was supposed to start this year.
The PRefChem joint venture includes a 300,000 b/d refinery, an integrated steam cracker with capacity to produce 1.3 million mt of ethylene located in Johor, Malaysia. Aramco was supposed to provide a significant portion of PRefChem's crude supply under a long-term supply agreement. Jazan and PrefChem will help Aramco reach a gross refining capacity of 5.6 million b/d, it said in the prospectus. The company currently owns and has stakes in four refineries abroad with a total refining capacity exceeding 2 million b/d.
Ethylene and propylene are feedstocks for producing polyethylene (PE) and polypropylene (PP).
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 1,589,580 tonnes in the first nine months of 2019, up by 7% year on year. Shipments of all PE grades increased. The estimated PP consumption in the Russian market was 976,790 tonnes in January-September 2019, up by 4% year on year. Shipments of PP block copolymer and homopolymer PP increased.
Saudi Aramco is an integrated oil and chemicals company, a global leader in hydrocarbon production, refining processes and distribution, as well as one of the largest global oil exporters. It manages proven reserves of crude oil and condensate estimated at 261.1bn barrels, and produces 9.54 million bbl daily. Headquartered in Dhahran, Saudi Arabia, the company employs over 61,000 staff in 77 countries.