South Africa’s biggest fuel refinery is shutting down

BP South Africa and Shell Downstream South Africa have announced they will pause operations at South African Petroleum Refineries (Sapref) in Durban by the end of March 2022.

The two shareholders of the refinery will implement a spending freeze and pause refinery operations at Sapref no later than the end of March 2022 as they will attempt to find a buyer for the refinery.

The decision comes after consultation with the government, unions, and Sapref employees.

“This will be for an indefinite period but with a restart possible in the future, including in the event of any future sale,” the companies stated.

The companies said the process would allow for an “informed finalisation” on the various options available to the shareholders, including a sale of the refinery.

“Until decisions about the future of the plant have been made — including a possible change of ownership — the Sapref shareholders are unable to commit to further investment in the refinery,” the companies said.

They added the pause of refinery operations currently had no impact on full-time employees.

The Sapref plant in Durban. Credit: lcswart / Shutterstock.com

According to Shell Downstream South Africa country chair Hloniphizwe Mtolo, the decision to pause the refinery was difficult for both shareholders.

The companies said they would use other existing assets and trading arrangements to ensure the ongoing security of fuel supply to the country and consumers.

“Shell remains committed to the security of supply to our customers over this production pause,” Mtolo stated.

“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,” said BP SA CEO Taelo Mojapelo.

With 35% of South Africa’s crude oil refining capacity producing 2.7 billion litres of petrol per year, Sapref is the country’s largest refinery.

It was previously forced to temporarily shut down operations during July 2021’s riots. The unrest had led to a shortage of critical materials reaching the refinery.

In the wake of the chaos, motorists were seen forming long queues at petrol stations out of fear that the country’s pumps would run dry.

At the time, the energy department was concerned that the shutdown would lead to shortages and announced regulations limiting the sale of petroleum products in portable containers.

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South Africa’s biggest fuel refinery is shutting down