The proposed 360 000-bl/d project Mthombo oil refinery will save South Africa about R12,6-billion a year in energy costs once it is running and exporting oil across Africa, President Jacob Zuma said on Thursday.

On a visit to PetroSA's Mossel Bay gas-to-liquids facility, he commended the national oil company (NOC) for the role it was playing in reducing the country's dependence on importing refined fuel.

"In Southern Africa, the demand for automotive fuels exceeds the local production capacity. This also affects South Africa, putting us in some kind of dependency trap, where we have to import refined automotive products," Zuma stated.

The President said that the proposed $11-billion refinery would showcase South Africa's competitive ability to its global counterparts.

The refinery, which would be built at the Coega Industrial Development Zone, in the Eastern Cape, would also result in employment for 27 500 people.

Construction on the refinery, which will be the biggest in Africa, was expected to start in 2012, with the refinery to come on stream by 2015.

The NOC believed that, without any additional investment in local refining capacity, South Africa will be forced to import about 8,5-billion litres a year, or 150 000 bbl/d, of fuel, which would negatively impact on the country's foreign exchange reserves and make national supply vulnerable to external factors.

PetroSA has repeatedly defended the new crude oil refinery while facing criticism from competitors that the project could cost more than expected and that the additional refining capacity might not be needed.

Energy Minister Dipuo Peters has previously voiced her support for the project.

Rival oil companies, including BP Africa have, however, called for a review of other supply-side options, including the expansion of existing refineries.