CAPE TOWN, Sept 27 (Reuters) - South Africa's petroleum
refinery capacity could become obsolete within two years, an
industry body warned on Monday, as it looks to extend the timing
of new government rules meant to reduce sulphur emissions from
2023 to a later date.
The South African Petroleum Industry Association (SAPIA),
which represents major oil companies, including BP and
Shell that operate local refineries, has been in
discussion with the government for years trying to resolve a
stumbling block over financing the upgrade of six refineries to
cleaner fuels.
In January, SAPIA warned that the impact of COVID-19 meant
it was unlikely oil firms in South Africa would upgrade
refineries at an estimated cost of $3.9 billion, unless the
government allowed them to pass the costs on to consumers or
offered some sort of financial support.
The government gazetted new Petroleum Products
Specifications and Standards in August that mandate the use of
ultra-low sulphur petrol and diesel products from Sept. 1, 2023.
"SAPIA is of the view that the very short time frame
provided for implementation is impossible to meet and will
likely render the refinery fleet obsolete within two years," the
industry body said in a statement.
SAPIA said it was in discussions with the Department of
Energy to amend the regulations so that a "mutually acceptable"
implementation date could be agreed, with a financial support
mechanism key.
"Without a financial support mechanism, it would be
difficult to justify the refineries' upgrade," said SAPIA.
Officials from the energy department did not immediately
respond to queries.
(Reporting by Wendell Roelf
Editing by Robert Birsel)