South Africa’s national oil giant, PetroSA, disclosed on Monday it has partnered with China’s Sinopec Group for the building of its refinery in the industrial port of Coega.
The ambitious project (called Project Mthombo) situated near Port Elizabeth on South Africa’s south coast was originally projected to cost between $9-$10 billion and will produce 400,000 barrels per day. But it had been stalled for several years due to fund constraints.
According to PetroSA: “The agreement defines the process by which PetroSA and Sinopec will shape the business case for Project Mthombo, the initiative to construct a world-class crude oil refinery at Port Elizabeth’s Coega Industrial Development Zone,”
The first phase of the agreement will focus on building a business case for the plant, and the second will consider engineering and design, it added.
Sinopec, China’s second-largest oil and gas producer, is expected to complete both studies over the next 18 months.
China has set aside $20 billion to invest in South Africa’s energy sector in keeping with its strategic plans for a growing presence and influence on the continent.
PetroSA chairperson, Linda Makatini, had revealed two years ago that the company was in talks with Sinopec and proposed to sell a 30 per cent equity holding in the refinery, which will be among the largest in sub-Saharan Africa.