The refinery is expected to lower the country's import bill and to significantly reduce South Africa's dependency on imported automotive fuels as demand increases.
The refinery, called Project Mthombo, will be situated within the Coega Industrial Development Zone and is expected to come on stream in by 2015 as one of the biggest post-2010 investments in South Africa.
"This project will significantly improve South Africa's fuels import bill," says PetroSA CEO Sipho Mkhize.
According to Bloomberg.com, demand for petroleum products in SA jumped by 6 percent in 2007, exceeding local refinery output for the first time. (South Africa's six existing refineries have the capacity to process 708 000 barrels of oil a day.)
By the time the Coega refinery is commissioned, South Africa will be experiencing a shortfall of locally-refined product of approximately 200 000 barrels per day.
A feasibility study conducted by a US refinery engineering firm concluded that Project Mthombo could produce 450 000 barrels per day and still maintain low cost through economies of scale and world class technology. Once commissioned, the refinery will be the lowest-cost producer of refined oil in sub-Saharan Africa.
"[Maintaining low costs] will enable the refinery to accomplish a balancing role and sustain a competitive advantage in open market conditions within both local and export environments," PetroSA's Joern Falbe said.
PetroSA is currently studying the feasibility of constructing a pipeline from Coega to Gauteng.
