SA’s biggest crude oil refinery to halt operations until further notice

South Africa’s biggest crude oil refinery is planning to halt operations until further notice after consultation with government, unions and employees, as well as SAPREF shareholders (BP Southern Africa and Shell Downstream South Africa).

SAPREF announced today that it will start a spend freeze and pause refinery operations by the end of March 2022 for an indefinite period, but a re-start is possible in the future, including any future sale.

The decision was taken to allow an informed finalisation of the various available options for shareholders, with a sale option preferred. The SAPREF shareholders are unable to commit to further investment in the refinery until decisions about the future of the plant have been made according to bpSA CEO, Taelo Mojapelo.

He said in a statement that the decision will not affect full-time employees, while safety remains a primary consideration. Moving forward, the shareholders will use other existing assets and trading arrangements to ensure ongoing security of fuel supply for the country and consumers.

“Over the decades since its establishment, SAPREF made immense economic contributions on a local and national scale. Therefore, we continue to pursue the sale of our share in the refinery so that it can continue to advance its legacy as a reliable, safe and productive asset.”

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Mojapelo says SAPREF has put measures in place leading up to the refining pause to ensure that it does not affect its customer-facing businesses in South Africa or its fuel supply obligations.

“We remain committed to South Africa through our demonstrated transformation initiatives in the value chain and will continue to work with our strategic partners to strengthen our differentiated convenience offers.”

Hloniphizwe Mtolo, country chair at Shell Downstream South Africa, the decision to pause the refinery was a difficult one for the shareholders.

“Shell remains committed to security of supply to our customers over this production pause. South Africa continues to be a key location for Shell as we progress with our growth agenda as an energy provider of choice and a nation builder.”

Established in 1963, SAPREF is the largest crude oil refinery in South Africa, with 35% of the country’s refining capacity. bp Southern Africa and Shell Refining South Africa co-own it as a joint venture.

The refinery has been a major contributor towards the socio-economic development of the country, refining essential products that include petrol, diesel, jet fuel, lubricating oil, liquid petroleum gas, paraffin, solvents, bitumen, marine fuel oil and chemical feed stocks.