JOHANNESBURG- A South African and a Mozambican company are to construct a R4-billion liquid petroleum pipeline between the two countries, reducing South Africa's reliance on Durban harbour and offering some hope that inland fuel prices might drop in the long term.
The National Energy Regulator of South Africa (Nersa) has issued a licence to build the pipeline from Maputo to Kendal in Gauteng, via
Nelspruit, to Petroline RSA. They will build the pipeline jointly with Petroline SARL of Mozambique.
This pipeline follows the construction of 865km of pipeline to supply natural gas from Mozambique to Mpumalanga and Gauteng, successfully completed in 2004.

Nersa agreed with the option to build the new pipeline from Mozambique, instead of a larger 24-inch line from Durban to Johannesburg, because it would be cheaper. Detailed design and environmental impact assessments for the project, already approved by the two countries, are currently under way.
According to Petroline RSA director Pinky Moabi, construction will start at the end of the year and the pipeline should be fully operational by the end of 2009.
"We hope that fuel prices will drop in Mpumalanga and some parts of Gauteng, because we will be getting fuel directly from the coast of Mozambique, and we know that fuel prices are lower on the coast than in inland cities," Moabi said.
According to Petroline, the pipeline will carry 3.5-billion litres of fuel a year and supply 25% of the fuel demand in Mpumalanga and Gauteng.
The pipeline will run from an existing coastal fuel storage depot at Matola Harbour in Mozambique to
Nelspruit, where an inland depot will be built, complete with rail and road loading infrastructure.
ABSA economist Chris Hart said that the pipeline's effect on prices would in all probability be felt in the long term. "The pipeline is unlikely to have an effect on fuel prices in the shorter term as the consumers would have to pay for it," Hart said. However, the pipeline "might cut costs to a certain extent in the main market in the long run.
"Currently, about two thirds of
South Africa's fuel is imported," Hart added. "There is refinery capacity shortage in the country."
The licence to build the pipeline went to Petroline ahead of state-owned Petronet, which Nersa spokesperson Nhlanhla Cebekhulu put down to Petroline's strong empowerment credentials.
Separately, it emerged that another pipeline is under consideration from
Phalaborwa to Maputo.
Palabora Mining, the country's biggest copper producer, may develop a steel plant with the Mozambican government in Maputo, a project similar to that investigated by Enron in 1997.
The project under consideration includes an expansion of the port and a pipeline to transport magnetite, a type of iron ore, from Palabora's mine in South Africa, the chief financial officer Charles Asubonten said on Friday.
Palabora produces the steel making ingredient, magnetite, as a by-product of copper mining. Palabora, controlled by Anglo American and Rio Tinto, plans to raise magnetite production further after a 27 percent jump in output last year. Iron ore prices rose 19.5 percent last year and will increase 9.5 percent to a record this year, their fifth consecutive annual gain.
Shares of Palabora rose R2.68 to close at R71.68 on Friday. The shares more than doubled in price over the past 12 months. Palabora had between 240 million and 270 million tons of magnetite, Asubonten said.
That would be sufficient to support a steel plant at the port in Mozambique's capital. He declined to comment on the cost of the project, the size of the steel plant being studied and the steel makers that Palabora has talked with.
Enron, which filed the biggest-ever corporate bankruptcy at the time in 2001, and the Industrial Development Corporation (IDC) had planned to develop a steel project in Maputo port nine years ago.
The mill, costing $2 billion (R14 billion), would have produced 4 million tons of steel annually, using Palabora's magnetite and gas from Mozambique's Pande field, which is now operated by Sasol.
Enron's bankruptcy in 2001 ended plans to build the plant, while the IDC quit the project two years earlier.
"The original project was going to be a steel slab plant," Abrie Audie of the South African Iron and Steel Institute said on Friday. "Both Highveld Steel and Vanadium and Mittal Steel are expanding, so you have to ask if there is a market."
The pipeline from Phalaborwa to Maputo would have been about 300km long, according to a 1997, Mozambique News Agency report, citing then transport minster Mac Maharaj. Magnetite could be transported through the pipeline in slurry form, Asubonten said.
Palabora's magnetite exports rose about 30 percent in the past year and will increase again this year, according to the annual report. Asubonten declined to disclose volumes.
Labels: development, mozambique, nelspruit