PetroSA, CDC sign agreement for oil refinery

Tuesday, October 6, 2009

Eastern Cape - PetroSA and the Coega Development Corporation (CDC) today signed a cooperation agreement for the planned Coega oil refinery.

The Coega refinery will be a major tenant in the Coega Industrial Development Zone (IDZ) near the new deepwater port of Ngqura and a catalyst for future development in the Eastern Cape.

Chief Executive Officer and President of PetroSA, Sipho Mkhize, said the agreement between the two parties clarifies their roles and responsibilities in the Coega IDZ during the construction and operation of the 400 000 barrels per day crude oil refinery.

Mkhize said the agreement will give potential investors confidence that the project was developed by major stakeholders in the country's economy, adding that the project was ready to move to the Front End Engineering Design phase.

The agreement provides for the CDC to recognise PetroSA as the official developer and promoter of the proposed refinery, the establishment of a joint project team as well as a land allocation agreement for Coega.

Additionally, the two agreed on roles and obligations with regards to future and downstream activities while also considering other opportunities in secondary industries like the establishment of the Coega IDZ as a petrochemical hub serving Southern Africa.

"The refinery will generate close to 27 500 temporary jobs during the construction phase and 18 500 permanent direct, indirect and induced jobs once operational," said PetroSA.

Welcoming the agreement, Chief Executive Officer of CDC, Pepi Silinga, said the planned refinery will be a major economic boost not only for the South African economy post 2010, but also for the Eastern Cape.

"Most current infrastructural developments in the country are in support of the world cup tournament, but the country needs to look beyond that to other major projects for sustained growth and economic development.

"The Coega refinery is a project which will provide economic stimulus, revitalise and redirect the automotive sector and re-skill and up-skill the key artisan employment sector," said Silinga.

A technical feasibility study for Project Mthombo has been completed and PetroSA's Board will decide by the end of the year to proceed to the next phase of the project while the final investment decision is expected in 2011.