SOUTH AFRICA – Saudi Arabia is holding talks with South Africa to build an oil refinery in the country as part of a pledge to invest as much as US$10 billion in the economy.

According to a Business Day report, joint studies for a refinery and petrochemical complex will be conducted by state oil giant Saudi Aramco and the Central Energy Fund.

Saudi Arabia, whose oil reserves are the second largest in the world, supplies about 40% of South Africa’s crude oil.

South Africa’s Energy minister Jeff Radebe and his Saudi Arabian counterpart Khalid al-Falih have signed a declaration of intent to co-operate in oil and gas.

Talks between the two have also broached the possibility of Saudi Aramco using the vast oil-storage tanks in Saldanha Bay harbour, north of Cape Town, which offers a strategic location for trading.

“There have been exchanges of talks by Saudi Aramco teams and they have been supported by the South African energy ministry,” Al-Falih said.

He said that Saudi Arabia was also interested in using South Africa’s major oil storage facilities, adding that Saudi utility developer Acwa Power was looking at investing in South Africa’s revamped renewable energy program.

On his part, Radebe has urged South African refineries to embrace domestic refining rather than depending on fuel imports.

South Africa’s President Cyril Ramaphosa is wooing investors to boost an economy that is said to have plummeted during the previous regime.

The renewed commitment by Saudi Arabia in investment in the country resurfaced in July when Ramaphosa toured the Middle Eastern nation.

South Africa is yet to introduce the clean-fuel law, something that has left refiners in limbo.

Sasol, the manufacturer of oil and chemical products, said it was considering possible sale of a refinery due to the country’s pending cleaner fuel standards.

The company has been conducting a review on the 150 000-barrel-a-day Secunda plant and 108 000 barrel a day Natref refinery, which it owns with Total SA.

Together the facilities represent more than a third of the country’s fuel refining capacity.

South Africa announced the Clean Fuels II policy in 2012 that would require lowering sulphur levels in gasoline and diesel.