Chemical Technology May 2015

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A strategy
for getting past the crossroad
Comment
The petrochemical industry and, by impli-
cation, the chemical and construction
industries, seem to be at an impassable
crossroad. The oil industry took one look at
the oil price and decided this was tantamount
to a catastrophe; meanwhile, oil refiners
have racked up enormous profits in the first
quarter of this year thanks to better refining
margins. One hopes this will urge more spend
where it is needed most, in clean fuels and
emission controls. Maintenance of refiner-
ies is an ongoing practice and is a budget
that cannot be tampered with too much.
However it is the large Capex projects such
as clean fuels and expansions that are the
lifeblood of the petrochemical contractors. The
spin-off is enormous; all the other disciplines
and those working in them, apart from process
engineers, are dragged in to the loop, includ-
ing environmental experts, civil engineers,
geotechnical engineers, mechanical engineers,
piping designers, construction engineers, elec-
trical and instrumentation engineers, as well as
a host of related suppliers to these disciplines.
Unfortunately, on the other side of the
crossroad is a number of almost seemingly in-
surmountable problems, including a shortage
of power, a labour force that is locked into the
inflation spiral and looks to annual increases
to maintain some semblance of a lifestyle, and
additionally, a weak rand, which makes the
imported cost of much-needed infrastructural
equipment almost prohibitive.
What can possibly ease the transition
across the crossroad? Government. Govern-
ment is the only agent that can kickstart the
industry, notwithstanding some of the legacy
issues that stand in its way. For example, the
enormous capital costs of the two coal-fired
power stations which are not only way behind
their original schedules, but are consuming
enormous amounts of money just to bring
about a final completion/commissioning date.
Gas should have been part of the equation a
long time ago, but is presently a long way off as
South Africa just does not have the infrastruc-
ture to distribute gas, whether it be in the form
of stranded gas in our neighbouring countries,
offshore gas fields, shale gas in our southern
provinces or Liquid Natural Gas, which is
becoming a worldwide traded commodity, but
needs significant infrastructure in the form of
ports, regasification terminals and pipelines.
At the end of last year, the most welcomed
decrease in the price of petrol and diesel would
have been an ideal opportunity to start up the
clean fuels refining strategy in South Africa,
with probably a fairly modest tariff on the then
fixed selling price. However, the fiscus spotted
this windfall and it did not take long for a hefty
tariff increase to appear, to be converted to
Tax Revenue income for the Revenue Service.
It is imperative that the refiners start their
clean fuels expenditure as soon as possible in
order to reach the Euro V emission standards.
Motor vehicles are being designed to operate
on these fuel specifications, but if we wait too
long, the cost of manufacturing a vehicle to
operate on the current refined specifications
will be prohibitive.
Gas is the energy of the future; clean fuels
are now a necessity, not a luxury. Let the
Strategy begin.
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Consulting editor:
Carl Schornborn, PrEng
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BAHons, DipLibSci (Unisa),
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Chemical Technology • May 2015
by Carl Schonborn, PrEng, consulting editor, ‘Chemical Technology’