The Central Energy Fund (CEF) group of companies faced sceptical questioning this week from lawmakers over plans to revive the Sapref refinery in Durban and PetroSA’s gas-to-liquids (GTL) refinery in Mossel Bay.

During a marathon session of the Portfolio Committee on Mineral and Petroleum Resources held to deliberate on CEF’s delayed 2024/25 annual report, CEF chairperson Ayanda Noah stressed the importance of the two refineries to the future of the group, as well as the recently formed South African National Petroleum Company (SANPC).

Now being referred to by CEF as the SANPC refinery, the Sapref facility was sold for R1 to the CEF in 2024 by energy majors BP and Shell.

The Mossel Bay GTL refinery, meanwhile, is also non-operational after PetroSA’s well-publicised failure to secure new gas resources, despite the multibillion-rand Project Ikhwezi drilling campaign. In addition, a subsequent partnership deal with Gazprombank Africa aimed at reviving the facility was terminated due to non-performance.

Noah told committee members that restarting activities at both refineries remained a board priority and said that a deadline of March 31, 2026, had been set for the completion of a bankable feasibility study into the revival of the Sapref/SANPC refinery.

While describing the restart of operations at the Mossel Bay refinery as challenging, she indicated that CEF was expecting to receive proposals from PetroSA by the end of January regarding the resumption of activities at the site.

Questioned about the technical and commercial viability of reviving Sapref and how such an endeavour would be funded, acting COO Sifiso Msabala said major capital investments would be required together with a strategic partner to both scale up output and to produce fuel in line with the country’s clean fuel specifications.

Msabala said the refinery’s nameplate would have to be increased from about 180 000 bbl/d to about 450 000 bbl/d to ensure its competitiveness, and insisted that the site, which was damaged during the 2022 KwaZulu-Natal floods, could house a refinery of that size.

Quizzed further about the commercial prospects of such a refinery, CFO Ditsietsi Morabe stressed the strategic nature of the project, which she said was designed to reverse the current trend of refinery closures and “address the issue of energy sovereignty”.

In parallel, CEF would seek to take advantage of the 15% allocation granted to it recently at the Island View Terminal in Durban, which had not been sold as part of the Sapref transaction. CEF was investigating using some of the tank infrastructure to store or blend final product ahead of distribution.

However, it also still needed to resolve a claim by Sasol on the residual crude oil stored on the site at the time of the Sapref acquisition.

Besides plans to resume refinery operations, CEF also listed several other projects that it said it was aiming to advance, including a sorghum-to-bioethanol venture and a gas-to-power project at Komatipoort, on South Africa’s border with Mozambique.

Msabala said CEF had received an environmental authorisation for an 800 MW gas-to-power project in Komatipoort and that it was currently pursuing a power purchase agreement, but did not provide further details.

The State-owned company reported a profit of R553-million for the year, elevated by a non-operating gain of R1.84-billion arising from the increase in assets relative to liabilities arising from the Sapref acquisition.

The gain helped offset an operating loss of R2.9-billion, on the back of lower PetroSA sales and the halt placed on the African Exploration Mining & Finance Corporation’s coal supply agreement with Eskom during the year.