Port Elizabeth, 21 May 2012 – PetroSA, South Africa’s National Oil Company, today concluded a Joint Study Agreement (JSA) on Project Mthombo with the China Petroleum Corporation (Sinopec Group), the People’s Republic of China’s (PRC) state-owned integrated energy and chemical conglomerate.
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.
It will involve the commissioning of studies over two phases. The first phase will focus on market studies, the review and selection of a business case. The second will develop a business case that is expected to prepare Project Mthombo for the important Front End Engineering Design (FEED) stage.
FEED refers to the basic engineering which is conducted after the completion of a Conceptual Design or Feasibility Study of a project. At this stage, before start of E.P.C. (Engineering, Procurement and Construction), various studies take place to figure out technical issues and estimate rough investment cost.
Sinopec was ranked 5th in the Fortune Global 500 index for 2011. One of its subsidiaries, the Sinopec Corp, is listed on the Hong Kong, New York, London and Shanghai stock exchanges. It, among others, specialises in industrial investment, the marketing and comprehensive utilization of oil and natural gas, oil refining and transportation of petrochemicals. The Sinopec Group has a staff complement of over 1 million.
In September 2011 PetroSA signed a Memorandum of Understanding (MoU) with the Sinopec Group aimed at creating the conditions for cooperation in the areas of developing a crude oil refinery, exploration, development and production of hydrocarbon opportunities and on downstream activities.
The JSA has made it possible for PetroSA and Sinopec to contract Sinopec Engineering Incorporation (SEI) to conduct the studies on behalf of the two companies. The two phases are expected to last 18 months.
In preparation for the studies, PetroSA and Sinopec have established a Steering Committee to guide and manage the process. A working group will also be set up to work closely with SEI.
PetroSA Group CEO, Nosizwe Nokwe, said the JSA with Sinopec would significantly advance the realisation of Project Mthombo.
”This JSA will align the partners and develop an integrated owner’s team, in line with best practices for the planning and executing of this mega project. Project Mthombo will significantly gain from the experience and expertise of Sinopec,” Ms Nokwe said.
“Last week during her Budget Vote Speech, Minister of Energy, Dipuo Peters, indicated that work was ongoing on the future of the country’s refinery infrastructure.
As PetroSA, we are convinced that the results of this important study will be key in the development of the 20-year Liquid Fuels Plan and the work of the Presidential Infrastructure Coordinating Commission,” Ms Nokwe added.
Commissioning of the Coega refinery is scheduled for the 2018-2020 period.
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