Shell & BP South African Petroleum Refineries (SAPREF) have announced that they will commence with a spending freeze and pause refinery operations no later than the end of March 2022. This will be for an indefinite period but with a restart possible in the future, including in the event of any future sale. The Durban-based refinery is responsible for a third of the country’s fuel supply.
SAPREF is a 50-50 joint venture between British Petroleum (BP) and Shell capable of producing 180 000 barrels per day, which accounts for 35% of South Africa’s refining capacity. SAPREF said the decision was taken to allow an informed finalisation on the various options available to the shareholders, a sale option being the most preferred.
Until decisions about the future of the plant have been made – including a possible change of ownership – the SAPREF shareholders said they are unable to commit to further investment in the refinery.
“The decision to pause refinery operations currently has no impact on full time employees, and safety remains a primary consideration. Moving forward, the shareholders will use other existing assets and trading arrangements to ensure ongoing security of fuel supply to the country and their consumers,” BP SA Chief Executive Officer Taelo Mojapelo said.
He said over the many decades since its establishment, SAPREF has made immense economic contributions at both a local and national scale. “For this reason, we continue to pursue the sale of our share in the refinery so that it can continue to advance its legacy as a reliable, safe and productive asset.
“Leading up to the refining pause, we have put contingencies in place to ensure that this decision does not impact our customer facing businesses in South Africa or our fuel supply obligations.
“We remain committed to South Africa through our demonstrated transformation initiatives in the value chain and continue to work with our strategic partners to strengthen our differentiated convenience offers.”
Last year, the Engen refinery in Wentworth turned into a storage terminal, after operating for 67 years. The plant had shut down after it was engulfed in flames in December 2020.