Saudi Arabia is in talks to build an oil refinery in SA as part of a pledge to invest as much as $10bn in the economy.
Joint studies for a refinery and petrochemical complex will be conducted by state oil giant Saudi Aramco and the Central Energy Fund, energy ministers from the two countries said in Pretoria on Friday. The negotiations mark a step forward in SA’s plans to add a refinery, which it has been considering for about a decade.
Saudi Arabia made its spending pledge last July as President Cyril Ramaphosa sought investment to revive a flagging economy. Although SA has struck previous agreements to develop a new refinery — including with China in 2011 — the project is yet to get off the ground.
With Saudi Arabia supplying about 40% of SA’s crude, ties between the two countries are close. Energy minister Jeff Radebe has called for an increase in domestic refining to cut reliance on fuel imports. But the pending introduction of clean-fuel standards has, if anything, prompted refiners to stall rather than expand, with Sasol considering selling a plant.
Radebe and his Saudi counterpart Khalid al-Falih signed a declaration of intent Friday to co-operate in oil and gas. Talks between the two have also broached the possibility of Saudi Aramco using the vast oil-storage tanks in Saldanha Bay harbour, north of Cape Town, which offers a strategic location for trading.
“We believe that SA will grow economically” and additional projects may follow those currently under discussion, Falih said, suggesting that Aramco could also help supply SA with natural gas. The Saudi delegation included its minister of commerce and deputy minister of mining, along with executives from Aramco.