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Repurposing South Africa’s Refineries

The Engen oil refinery in South Africa, the country’s oldest, will be converted into a terminal capable of importing cleaner fuels after suffering annual losses for much of the last decade. It would be too costly to refit the plant in Durban, which opened in 1954, to meet evolving emissions regulations, Yusa Hassan, chief executive officer of Engen, a unit of Malaysia’s Petroliam Nasional Bhd, said in an interview. The move will be closely watched by companies including Glencore Plc and Royal Dutch Shell Plc, which own stakes in processors in the country that have experienced accidents or are under review. Most of South Africa’s refineries halted production temporarily last year as lockdown measures to control the Covid-19 pandemic eroded fuel demand. Glencore unit Astron Energy’s Cape Town plant was shut by an explosion in July and is expected to resume production some time in 2022. Engen restarted until a fire broke out in December, forcing it to shut again. The company will convert the 120,000 barrel-a-day refinery into a terminal in 2023 to “help the sustainability of the business,” Hassan said. Limited operations will continue in the interim. It will seek to preserve jobs and may turn part of the site into an industrial hub, the CEO said. Older refineries with small capacity designed for domestic consumption are finding it difficult to compete with bigger and more agile plants that export fuel. Exxon Mobil Corp. will convert its processor into an import terminal in Australia and is looking to do the same for another in Norway.