Johannesburg — NATIONAL oil company PetroSA yesterday entered the fray over its 400 000 barrel-a-day crude oil refinery, saying BP Africa's recent public lobbying against investment in a new refinery could be driven by fear of competition.

Following BP's public lobbying for government not to take a hasty decision on the refinery, PetroSA CEO Sipho Mkhize moved to defend the refinery.

BP Africa CEO Sipho Maseko said it made no sense for PetroSA to build a new refinery when there was sufficient petroleum refin ing capacity globally.

Mkhize said: "Although we recognise BP may not be comfortable with fresh competition, building a new crude oil refinery would certainly be in the best interests of SA."

The construction of the refinery was in line with the government's energy security master plan and the industrial policy action plan.

It was "understandable" BP would prefer that the refinery, known as Project Mthombo, not be built, Mkhize said. This would prolong SA's dependence on imported petroleum products, "leveraging the global assets and trading activities of BP. It also means profit generated in the regulated South African market is not reinvested, to any major extent, in the country. This is clearly not in SA's best interest."

Mkhize said PetroSA's business proposal for the refinery was not a product of "haste". It had conducted prefeasibility and feasibility studies over three years. The studies, by US-based engineering group KBR, confirmed the project was technically feasible and commercially viable.

Mkhize said the project was ready to proceed to the front-end engineering design phase, which would take 15 months. Completion of this phase would enable PetroSA to take a final investment decision early in 2012.

"Although, clearly, the refinery will be commercially competitive, it addresses several of SA's pressing needs that are just not considered by BP," he said. These included job creation and economic development in the Eastern Cape.

"Project Mthombo's development has been an open, transparent and inclusive initiative during which PetroSA has on numerous occasions publicly invited the local (independent oil companies) to participate in the venture.

"A few, unfortunately not BP, have shown interest in this invitation that includes exploring synergies between Mthombo and existing local refineries," Mkhize said.