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S Africa's largest refinery Sapref declares force majeure on civil unrest: sources

Highlights

Arrest of former President Zuma leads to protests

Sapref says it had to close plant due to civil unrest

S Africa likely to be even more reliant on fuel imports after closure

South Africa's largest refinery Sapref has shut down due to social unrest caused by the arrest of former President Jacob Zuma, pushing the refiner to declare majeure on the supply of all oil products, sources close to the matter said on July 14.

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This means three out of the country's five refineries are offline, leaving it very dependent on imports for its fuel needs.

The jailing of Zuma on July 8, led to widescale protests, which began in Zuma's home province of KwaZulu-Natal and has now spread to other regions.

This unrest has disrupted supply routes in and out of KwaZulu-Natal, and there are concerns that fuel shortages might be imminent, according to sources.

In a letter to clients dated July 13, Sapref said it had to make the difficult decision to shut down the plant and declare force majeure due to "to the civil unrest in the country and disruption of supply routes in and out of Kwazulu-Natal."

The 175,200 b/d refinery, operated by Shell SA Refining and BP Southern Africa, had only just restarted a few weeks ago after a month-long maintenance. The refinery is a key exporter of bunker fuel, fuel oil feedstocks, bitumen and base oils.

A spokesman at Sapref was unavailable for comment.

Increase in imports

Fuel imports in South Africa are likely to continue at elevated levels as the country grapples with a collapse in its refining capacity.

South Africa has imported around 317,000 b/d of refined products so far in 2021, according to estimates from data intelligence firm Kpler. This is the highest in almost a decade, according to S&P Global Platts estimates. This compares with 191,000 b/d and 173,000 b/d in 2020 and 2019 respectively, Kpler data showed.

South Africa, a net importer of transport fuels, has ramped up its intake of diesel and gasoline, with almost half the country's total refining of 510,000 b/d offline due to recent refinery hitches.

The 125,000 b/d Engen refinery in Durban and Astron Energy's 110,000 b/d Cape Town refinery remain offline.

The Engen refinery will be converted into an import terminal while Astron's plant is not expected to restart till at least end-2021 or early-2022, after it suffered an explosion in July 2020.

This means the 108,500 b/d Natref refinery in Sasolburg and Sasol's 160,000 b/d coal-to-liquids (CTL) plant in Secunda are the only refineries still functioning in the country.

The South African refining sector has been riddled with underinvestment, and its refining capacity mostly comprises non-complex refineries, which will require costly upgrades as it pushes toward using refined products with lower sulfur content.