Sapref Turnaround May Pressure South African Lubes


Saprefs refinery in Durban, South Africa, has moved up a scheduled two-month maintenance shutdown following an April 17 pipeline fire, raising concerns in the South African lubricants market because the refinery has one of the countrys two API Group I base oil plants.

Sapref is a 50-50 joint venture between Shell SA Refining and BP Southern Africa.

After the fire, the 172,000 barrels per day refinery in Durban shut down April 20 for maintenance that previously was scheduled to begin May 1, a Sapref spokeswoman told Reuters in an April 20 report. The original plan called for the refinery to resume operations July 1, but the reopening is now slated for mid-June.

The refinery has a base oil plant with 3,300 b/d of API Group I capacity. Because Sapref is South Africas only remaining producer of Group I base oil, industry sources expressed concerns that its shutdown may impact the local lubricant market.

Lubabalo Bethela, business development manager for Orbichem South Africa, agreed that the shutdown of Sapref will impact independent lubricant blenders, who depend on oil majors for base oil supply.

It puts the already constrained supply situation in South Africa under severe pressure, given that this shutdown was brought forward after the explosion of one of the pipelines. We cannot assume that we in South Africa currently have adequate import infrastructure to substitute for market demand, said Lubabalo.

The majors will just close shop and keep whatever is at their disposal for internal consumption.

However, Patrick Swan of Aswan Consulting believes that the anticipated impact of Saprefs shutdown will be cushioned by imports. Swan said the majors have already put in place adequate arrangements to neutralize any impact that may arise from Saprefs shutdown.

According to Swan, in view of the global base oil pricing, it makes better financial sense to get on the global market rather than produce locally. He noted that it is more profitable for majors to import base to South Africa rather than to produce locally.

A local player, who spoke on condition of anonymity, told Lube Report, Since it was a planned shut down for May, plans would have been put in place to cushion the impact, if any.

For his part, Samer Akram, director of operations for Unichem Services South Africa, concurred that the temporary shutdown of Sapref will be of no significance because majors are already importing base oils into South Africa.

However, he added that there is potential impact in the bright stock market, which he said is yet to be felt.

Lubabalo agreed that bright stock may be hit hardest in the long run because a few trading and distribution companies have been turned away in Europe, and there is just no bright stock.

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