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Engen refinery to be converted into storage terminal

Published by , Editorial Assistant
Hydrocarbon Engineering,

South African company Engen has announced that it will be proceeding with its refinery to terminal (RTT) conversion initiative, concluding that the refinery is not sustainable long-term.

Yusa’ Hassan, Engen Managing Director and CEO, commented: “The conclusion of the strategic assessment is that the Engen refinery is unsustainable in the longer-term. This is primarily due to the challenging refining environment as a result of a global product supply surplus and depressed demand, resulting in low refining margins, and placing the Engen refinery in financial distress. Furthermore, unaffordable capital costs to meet future CF2 regulations compliance continues to be a challenge for the long-term sustainability of the refinery.”

Hassan added: “The RTT is part of a long-term business sustainability strategy to ensure Engen is resilient against future market threats and can respond with agility to new opportunities. It also has a knock-on benefit of a reduction in emissions and carbon footprint that will contribute towards Engen’s environmental stewardship commitments. The conversion will also deliver a significant drop in electricity and water consumption, which will mean more electricity and water would be available for under-served households.

“The RTT commissioning date is anticipated to be in the 3Q23, with significant capital investments under consideration. The Engen refinery, located in the south of Durban and commissioned in 1954, is the oldest refinery in the country and is responsible for approximately 17% of the country’s fuel production. With a nameplate capacity of 120 000 bpd, it ranks as a low capacity, medium complexity facility with limited upgrading potential. An added consideration for any upgrades is that it sits on a restrictive plot size and is located within a residential area; of which both factors render a potential capacity modification unfeasible. The global refinery landscape has changed significantly in the past decade with the emergence of mega sized, integrated, and complex refineries, many of which operate in countries that are primary suppliers of crude, resulting in a prolonged period of ultra-low refinery margins that are forecasted to persist well into the future. This was exacerbated by the onset of the COVID-19 pandemic, which resulted in further contraction of demand.”

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