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* SAPREF refinery is South Africa's biggest
* Upgrading refinery to cost $252 mln-$288 mln
* Refiners still discussing cost recovery with government
By Wendell Roelf
CAPE TOWN, Nov 22 (Reuters) - BP Southern Africa (BPSA) willinvest $1 billion in South Africa in the next five years withmore than a quarter of that set aside to upgrade the SAPREFrefinery to produce lower sulphur diesel, its chief executivesaid on Thursday.
The 180,00 barrels per day SAPREF refinery, South Africa'slargest, is a 50:50 venture between Royal Dutch Shelland BPSA, a subsidiary of British oil major BP. The plantis located in the east coast city of Durban.
BP would invest 3.5 billion-4 billion rand ($252million-$288 million) in the refinery upgrade, Chief ExecutivePriscillah Mabelane told Reuters, adding that about 40 percentof the total $1 billion investment would go on retailactivities.
She said the upgrade would make "sure the refinery can meetthe new specifications in terms of low sulphur and Marpolregulations."
The plant would shut for maintenance from May to June 2019,she added.
The upgrade has been driven by new rules demanding a lowerfuel sulphur content and changing customer preferences forcleaner diesel, such as D50 and D10.
Refinery operators have been in long-running talks withgovernment on how to recover costs from upgrading work needed toproduce cleaner fuel in South Africa, the continent's mostindustrialised economy.
"From an industry perspective we are pushing very hard toensure that there is policy clarity because we have been on thisjourney very long, almost a decade," Mabelane said about theongoing talks.
Industry players estimated in 2009 that the cost to upgradeto cleaner fuels would be about $4 billion.
Other operators in the sector include Total andSasol.
Besides upgrading the refinery, Mabelane said BPSA wouldexpand its retail activities in South Africa.
"We are aggressively going to grow our footprint in thecountry," she said on the sidelines of an event with retailerpartner Pick n Pay to launch a new innovation for aloyalty card that will also work at BP fuel stations nationwide.
BP was looking at opportunities to expand its services inMozambique, where it is the second largest oil company, Mabelanesaid. "The market is exciting and dynamic," she said.
($1 = 13.8783 rand)(Reporting by Wendell RoelfEditing by James Macharia and Edmund Blair)
