MOSCOW (MRC) -- South Africa's oldest crude oil refinery, the 120,000 barrel per day plant operated by Engen (Enref), will be converted into a new storage facility because the refinery is no longer sustainable in the long term, said Hydrocarbonprocessing.
The refinery, situated on the eastern coast in the city of Durban, has been shut down since a fire in December damaged the plant that supplies around 17% of the country's fuel production and is South Africa's second largest crude refinery. "The conclusion of the strategic assessment is that the Engen refinery is unsustainable in the longer-term," Engen's CEO Yusa Hassan said in a statement.
Engen is majority-owned by Malaysia's oil and gas firm, Petronas. Hassan said a globally challenging refining environment with supply surplus, depressed demand and low refining margins had placed Engen in "financial distress".
Hassan added that unaffordable costs to meet the government's cleaner fuel drive by upgrading refineries was another reason to convert the refinery operating since 1954.
The South African Petroleum Industry Association (SAPIA), which represents operators such as BP (BP.L) and Shell (RDSa.L), said in January that local refinery operators were less likely to invest 40 billion rand (USD2.8 billion) for these upgrades after the coronavirus pandemic.
Africa's most industrialised economy has five other refineries. It is a net importer of petroleum products.Hassan said the new import and storage terminal was expected to be commissioned in the second half of 2023. He did not provide any cost estimates for converting the refinery.
As per MRC, crude oil futures were rangebound during mid-morning Asian trade May 20, following an overnight slide, on increasing prospects of the restoration of the Joint Comprehensive Plan of Action, the strengthening US dollar and bearish Energy Information Administration (EIA) data. At 10:49 am Singapore time (0249 GMT), the ICE Brent July contract rose 5 cents/b (0.08%) from the May 19 settle at USD66.71/b, while the June NYMEX light sweet crude contract was up 6 cents/b (0.09%) at USD63.41/b.
As MRC wrote earlier, Indian refiners, anticipating a lifting of US sanctions, plan to make space for the resumption of Iranian imports by reducing spot crude oil purchases in the second half of the year. The world's third-largest oil consumer and importer halted imports from Tehran in 2019 after former US President Donald Trump withdrew from a 2015 accord and re-imposed sanctions on the OPEC producer over its disputed nuclear programme.
Ethylene and propylene are the main feedstocks for the production of polyethylene (PE) and polypropylene (PP), respectively.
According to MRC's ScanPlast report, Russia's estimated PE consumption totalled 576,270 tonnes in the first three month of 2021, up by 4% year on year. Low density polyethylene (LDPE) and high density polyethylene (HDPE) shipments increased. At the same time, PP shipments to the Russian market totalled 410,890 tonnes in January-March 2021, up by 56% year on year. Supply of homopolymer PP and PP block copolymers increased.
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