Chevron loses with Nersa on oil storage


Nersa appeal in favour of Burgan….

cape town harbourWhether Chevron would or would not close down its refinery in Cape Town was asked twice by MPs during a debate in the Portfolio Committee on Energy on the licence supplied by the National Energy Regulator (NERSA) for the construction of a new oil tank terminal to be constructed at Cape Town harbour.

The storage facility, comprising twelve tanks with loading facilities, is to be constructed next to the Eastern Mole berth by Burgan Cape Terminals, a subsidiary of international oil trading merchant Vitol in which local BEE companies, Thebe Investments and Jicaro Ltd., have a 30% stake.

Crompton says move “a ploy to ransom”

Dr Rod Crompton, NERSA’s Regulator, said he thought that such a move by Chevron as closing the rod cromptonrefinery was unlikely and the possibility, as stated by Chevron in their appeal, was just a ploy to “ransom” the government in denying Burgan the licence.”

There were some 13,000 jobs involved at Chevron and he said “I cannot see Chevron pulling out.”

Dr Crompton expanded on this by saying that Chevron’s objection had come at a particularly sensitive point in the oil industry’s history when possible government subsidies were being argued about, with refineries calling for help in a re-build programme to meet cleaner fuels specifications (CF2) in terms of international agreements signed by South Africa.

Dr Crompton said new vehicle engines were already being manufactured based in the new specifications and “the pressure was on”.

No pipeline from Cape Town

chevron CTHe said that Chevron had maintained in their appeal against the licence being granted to Burgan that they were situated in a province where production exceeded demand and Transnet had supplied no pipeline from Cape Town to the industrial heartland of South Africa.

This was in comparison to KzN, where the Transnet Durban/Gauteng pipeline ensured flow from Sapref (Shell and BP) processing some 24 000 tons crude per day and Enref (Engen) had a nameplate capacity of 135, 000 barrels per day, all of which was far in excess of the demands of their province.

Dr Crompton said that Chevron was asking for a dispensation which no other refiner enjoyed, whereas in fact in Durban the two refineries competed with each other.

Not impressed

Present  in the audience seating at the meeting were Nobuzwe Mbuyisa, Chairperson of Chevron and various other Chevron executives. They remained impassive throughout the NERSA presentation.

NERSA had noted, Dr Crompton said, that South Africa generally was in need of storage capacity and NERSA had only licensed in the Cape Town area three facilities for petrol and diesel and only one of these allocated any storage for third parties. A total national storage figure of 1.7% was only available in fact, he said, to third parties throughout the country.

Burgan says no supply security

NERSA said that on the question of loading facilities, Burgan had pointed out to NERSA that there waschevron tank no security of supply for the area, since Chevron owned the only facilities, although Chevron had argued, Dr Crompton said, that it had spare capacity. But this was not the case at all, he said.

Dr Crompton said NERSA had decided that in the light of the fact that a study had shown that South Africa’s refineries in general were ageing; that Chevron’s port infrastructure had constraints in the context of growth and there was limited access to third party storage, especially new BEE entrants and that that truck discharge rates were the key bottleneck and not as either party stated, that a licence for storage as well as discharge facilities should be granted to Burgan.

Why come to Parliament?

All MPs from both parties complained that whilst the dissertation had been interesting, as the decision had already been made by NERSA why they asked was the Committee’s time being wasted when the matter that was already a fact.  Dr Crompton replied that NERSA had been invited by Parliament to expand on the security of supply issue at the invitation of a Parliamentary Study Group on the subject.

gordon mackay DAGordon Mackay, Shadow Minister of Energy, said that security of supply was a matter for the Department of Energy not NERSA but he warned that Vito were large merchant traders and that the storage facilities were well off normal oil trading sea routes.

The oil game

The tanks, he warned, could very well be used by Burgan for dumping in a game of oil price manipulation, as Burgan were traders not refiners and product suppliers but time would tell.

Dr Crompton dismissed such a suggestion out of hand.

Other articles in this category or as background
South Africa still off the hook on Iranian oil
Fuel price controlled by seasonal US supply – ParlyReportSA
CEF hurt by Mossel Bay losses – ParlyReportSA

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