South Africa: Industry warns on jobs impact of BP-Shell refinery closure

By Ray Mwareya, Ashley Simango
Posted on Friday, 25 February 2022 12:51

A general view of part of the South African Petroleum Refinery (SAPREF) is seen in Durban
The South African Petroleum Refinery (SAPREF) is scheduled for indefinite closure. REUTERS/Siphiwe Sibeko

Sapref, majority-owned by BP and Shell, is the Durban-based crude oil refinery that supplies 30% of South Africa's petroleum needs. Its planned indefinite closure has been welcomed by environmentalists, while the industry warns of jobs at risk.

“Job losses are expected to be extensive,” says Avhapfani Tshifularo, the director of the South African Petroleum Industry Association (Sapia). The oil sector has the second-highest multiplier effect on GDP among industries in the South African economy: Tshifularo says that for every job within the industry, a further 1.52 jobs are supported elsewhere.

Jobs are a major issue in South Africa’s KwaZulu Natal province, where the Sapref refinery is located. The province was the scene of fatal riots in 2021 which also cost businesses billions of rand. BP and Shell are considering selling the plant, which will be shut by the end of March. A restart remains possible, including in the event of any sale, the companies have said.

The decision indicates that other South African refineries may be in danger. “The closure of refineries would lead to tens of thousands of jobs being placed at serious risk, not only in the refineries themselves but also in those that supply services to the plants, and those that rely on the production of specialty products,” Tshifularo says.

‘Blackmail’

South Africa’s green activists argue that alarm over jobs is a form of blackmail. They point to independent health studies linking the refinery to higher than normal rates of cancer in neighbouring communities. Desmond D’Sa, coordinator of the South Durban Community Environment Alliance (SDCEAU), says the refinery is over 60 years old and would probably cost billions of euros to upgrade.

SDCEAU has previously reported the refinery to South Africa’s mines ministry and parliament over allegations of spewing out toxic waste, and is demanding reparations for communities affected.

  • D’Sa argues that energy transition would mean the creation of jobs in new industries.
  • “We believe that the closure allows South Africa to decide on other options that will create healthy jobs. We do not have much time as we are experiencing excessive heat, droughts, runaway fires, floods in South Africa,” he says.

Sapref and the South Africa government is hiding critical information, such as emission inventories and environmental reviews, says Rico Euripidou, the coordinator for Groundwork, an environmental alliance working across southern Africa.

  • Questions sent to Sapref’s managing director Victor Bester over pollution did not receive a response.

Sulphur Emissions

New owners at Sapref would need to introduce new technology in line with the EU emissions standards for products exported from South Africa. In September, the South African Petroleum Industry Association warned that South Africa’s refinery capacity could disappear within two years as the government forces through rules geared to reduce sulphur emissions from 2023.

  • Upgrading refineries to meet new emissions standards would require “huge financial investment,” Tshifularo says. The Sapref refinery will not have the capacity to produce in time for the 2023 implementation timeline, he adds.
  • “South Africa currently meets about 50% to 60% of its (petroleum) requirements through imports. If all the refineries close, this will rise to close on 85%,” Tshifularo warns.

Bottom line

South Africa faces a trade-off between jobs and emissions at least in the short term.

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