South Africa: Investment Required from Petronas for Engen

The refinery plant was built in 1954 on a model very different to modern refineries. "It's typical of the older refineries. The complex configuration was popular after the Second World War, aimed at creating employment," Oosthuizen said. Investment required is said to be around us$2bn

The model has also served people in the neighbouring area of Wentworth, a lower-income township where jobs are scarce. "If we don't follow the conversion option, which would include installing a hydro cracker to make new products and increasing refining capacity to more than 200 000 barrels a day, it will have a big knock-on effect on the local economy."

The plant's general manager, Willem Oosthuizen, said investment  options in the plant over the next few years are crucial  and a decision will have to be taken by the end of next year. Being the oldest refinery in SA  is a large part of the problem. Production has been patchy at times, punctuated by fires that have closed the refinery down. Oosthuizen said while maintenance costs have dropped, they remain high.

Another option for the refinery plant is to become a "post-treatment" facility, not refining but adding to the finished products. "That would scale the cost down to about Rand1bn, but would have a severe effect on our margin." The third option is for the plant to become an import terminal, just storing the crude oil pumped through a pipeline off the coast by oil tankers every day.

With more than 20% of the market,Engen is the largest petrol retailer in South Africa.

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