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PetroSA, Coega sign refinery agreement

8 October 2009

State oil and gas company PetroSA and the Coega Development Corporation (CDC) this week signed a cooperation agreement for the planned crude oil refinery at Coega outside Port Elizabeth.

The proposed refinery would be a major tenant in the Coega industrial development zone (IDZ) near the new deepwater Port of Ngqura and a catalyst for future development in the Eastern Cape province.

PetroSA CEO Sipho Mkhize said the agreement between the two parties clarified their roles and responsibilities in the Coega IDZ during the construction and operation of the 400 000 barrel-per-day refinery.

He said that the agreement would give potential investors confidence that the project was being developed by major stakeholders in the country's economy, adding that the project was ready to move to the front-end engineering design phase.

A technical feasibility study for the project has also been completed, and PetroSA's board will decide by the end of the year whether to proceed to the next phase of the project, while the final investment decision is expected in 2011.

Official developer and promoter

The agreement provides for the CDC to recognise PetroSA as the official developer and promoter of the proposed refinery, the establishment of a joint project team, as well as a land allocation agreement for Coega.

Additionally, the two agreed on roles and obligations with regards to future and downstream activities, while also considering other opportunities in secondary industries, such as the establishment of the Coega IDZ as a petrochemicals hub for the southern African region.

"The refinery will generate close to 27 500 temporary jobs during the construction phase and 18 500 permanent direct, indirect and induced jobs once operational," PetroSA said.

'Major economic boost'

Welcoming the agreement, CDC chief executive Pepi Silinga said the planned refinery would be a major economic boost not only for the South African economy post-2010, but also for the Eastern Cape.

"Most current infrastructural developments in the country are in support of the World Cup tournament, but the country needs to look beyond that to other major projects for sustained growth and economic development," Silinga said.

"The Coega refinery is a project which will provide economic stimulus, revitalise and redirect the automotive sector, and re-skill and up-skill the key artisan employment sector," he said.

Source: BuaNews