South Africa will know by mid-December whether it would get a new independently owned and operated liquid fuels storage and distribution facility at the Eastern Mole of the Port of Cape Town.

The National Energy Regulator of South Africa (Nersa) was currently mulling all the outcomes and submissions that had emerged from the public hearings held this week over the disputed issue of a licence for the development of the new facility.

Transnet National Ports Authority (TNPA) earlier this year awarded a 20-year tender to Burgan Cape Terminals to build fuel storage and distribution facilities – a move oil major Chevron opposed as it believed it would negatively impact its own Milnerton-based Calref refinery.

Chevron currently operated a 110 000 bl/d refinery producing gasoline, diesel, jet fuel, liquefied petroleum gas, fuel oil, asphalt and other products, which it averred would be threatened by the new facility.

Burgan stood firm in its belief that the project would not jeopardize Chevron’s existence and that “at worst, the introduction of an alternative supply of fuel may reduce Chevron’s profits at its Western Cape refinery,” said Burgan CEO Muziwandile Mseleku.

Speaking to Engineering News Online, Mseleku said Chevron’s fears were unfounded, with the “main concern” being that of clean fuels imports displacing production, costing jobs and leading to the shutdown of the refinery.

However, in addition to regulations governing imports, the level of clean fuel use was still low, as South Africa had not fully developed a market for the product, leaving this argument as “a small element” that could be mitigated.

Meanwhile, TNPA aimed to mitigate and improve the security of fuel supply and associated flexibility through the deployment of additional storage and distribution facilities in the Cape Town harbour.

“Security of fuel supply to the Western Cape is essential for the region’s economic growth. Unfortunately, fuel shortages continue to be an issue for the region,” Burgan stated.

Currently, the Western Cape’s fuel was supplied from Chevron’s local refinery and when routine or unplanned shutdowns for maintenance occurred, the refinery shipped in additional product from Durban.

However, the refinery did not produce 50 ppm low-sulphur diesel and illuminating paraffin, which was imported into the Cape Town port.

“The presence of appropriately sized tanks directly connected to the berth and a road loading facility will offer an essential alternative for fuel supply that will significantly reduce the chance of fuel shortages as previously experienced in the Western Cape,” Mseleku averred.

Nersa regulator member responsible for petroleum pipelines Dr Rod Crompton told Engineering News Online that security of supply, proposed black economic-empowerment opportunities and structures, job security for Chevron employees, as well as the refinery’s small business suppliers and service providers, and competition were some of the factors stakeholders at the public hearings wanted unpacked.

Several presenters with a diversified range of interests – either for or against the project – advanced their arguments over the licence, he said.

THE DISPUTED PROJECT
Burgan expected to spend about R650-million in capital expenditure in the first two years of development of the multipurpose facility, which would be used for the storage and distribution of both locally produced and imported fuels.

To date, about R75-million had been spent on project development, with Burgan expecting to start construction in February 2015.

As operations started in June 2016, other companies would have the option of “renting” space from Burgan for storage of their fuel products.

Burgan had secured two long-term contracts with an established oil marketing company and a new entrant.

“These customers [expect] joint throughput of up to 805 000 m3/y and will mainly off-take their products from the Chevron Oil refinery,” Burgan noted.

All TNPA, municipal and other regulatory requirements for the project have already been met, with approval for the final environmental-impact assessment, which was submitted in October, expected by the end of January 2015.