One of the major economic powerhouses along the western seaboard, the Chevron Refinery, is facing one of its biggest challenges in recent memory.
How will they stay economically viable if Burgan Cape Terminals is allowed to open a fuel storage and import facility at the harbour?
Burgan has already received its licence from the National Energy Regulator (Nersa), but the company is still waiting for the results of an environmental impact assesment (EIA).
Both Burgan and Chevron South Africa are waiting anxiously.
TygerBurger spoke to Nobuzwe Mbuyisa, chairperson for Chevron and the South African Petroleum Industry Association, about how this decision could impact the Milnerton refinery.
Over the years the refinery has taken a large dose of criticism from the local community, mostly for their pollution concerns, but the company’s economic benefits remain conclusive.
If Burgan is given the green light and if no import regulations are placed on them, then Chevron will suffer.
“If the refinery becomes economically unviable we’re looking at 500 direct and 13 000 indirect jobs lost,” says Mbuyisa.
“We’ve also got skills development programmes earmarked for the local community and we work closely with the library at the primary school in Dunoon and a laboratory at Bosmansdam High School.”
Mbuyisa admits Chevron is indeed fighting for its own survival, so to speak, but that the potential negative effects on the greater scheme of things could be devastating for South Africa’s manufacturing industry as a whole.
“South Africans have more to lose than Chevron. Every winter we run out of Liquefied Petroleum Gas (LPG) because of a limited import infrastructure, so refineries play a very big role in supplying LPG. The closure of even one refinery will have a significant impact on the LPG market. Many industries rely on this market and this could result in a chain reaction going forward,” she explains.
The refinery also apparently produces sulphur as a by-product, which is then used as fertiliser.
“So if we stop producing it, sulphur would have to be imported from another country, which creates jobs there and not here,” elaborates Mbuyisa.
Chevron has contested the licence given to Burgan, a company that would be in direct competition with it.
Burgan has queried Chevron’s stance, and questioned their opposition.
Mbuyisa, in turn, says Chevron has no issue with healthy competition, as long as it serves the greater good of South Africa’s socio-economic challenges.
The latter fears Burgan might flood the market with an unlimited amount of clean imported fuel, which could potentially have devastating effects for Chevron.
“We are very concerned about this decision to grant them a licence. Nersa should take appropriate action now to prevent an unwanted future,” she stresses.
Much depends on the outcome of the EIA, which in this case solely focuses on the socio-economic environment.
All Mbuyisa’s concerns will be taken into account by the authorities.
If Burgan is allowed to operate from the harbour after the EIA, then Chevron hopes the imports will be carefully regulated.
If this doesn’t happen then Chevron will, according to Mbuyisa, be unable to make up for their major recent investment in the Milnerton refinery.
“During the current shutdown, we have spent R451 million in 45 days alone. This is not including the one billion rand that we have spent on fixed supplies and services.”