MEDIA RELEASE
7 April 2006

Minister praises SAPREF for Clean Fuels project.

SAPREF's new cleaner fuels plant has done more than eliminate lead from petrol and reduce sulphur in diesel - it has boosted local employment, pumped millions of rands into BEE and is designed to produce products with a direct environmental benefit.

In keeping with government's programme for cleaner petrol and diesel by 1 January 2006, SAPREF shareholders BP and Shell committed full funding of R700-million for a new plant to produce a new generation of fuels resulting in improved air quality.

The LION (Large Increase in Octane Number) plant was today unveiled by Minister of Energy and Minerals, Mrs Lindiwe Hendricks. This plant exceeded the International Project Institute's global and South African safety benchmarks during its two year construction, came in on budget and on schedule in early December and made a significant contribution to the local black economy

Speaking at a ceremony at SAPREF attended by community leaders, captains of commerce and industry and representatives of the petrochemical industry, Mrs Hendricks said the company's investment in new fuel refining technology was an investment for the future of the country and its people.

She lauded SAPREF for rather than replacing lead with other octane boosting additives, choosing to further refine petrol components to produce the cleaner products.

"Directly linked to investments such as yours, and future ones that need to be made so as to match fuel specifications of our global trading partners, is the whole issue of international security of energy supply, which has become a concern to all of us.

"The investments you made are therefore in sync with this global vision, because the end goal is international security of supply through harmonisation of fuel specifications. We should therefore be proud when we see our own industry investing for the future so as to participate in the global market place of energy, with an objective of being part of that greater collective that seek to ensure security of supply for the global village we live in.," she said.

"Over and above ensuring the production of unleaded petrol and low sulphur diesel, it is also encouraging that the project plan included BEE and local job creation objectives as in the case of this SAPREF plant.

"I must compliment SAPREF and the other players in the petrochemical industry for upholding the practice of sustainable development."

SAPREF Managing Director, Wayne Pearce, said the production of unleaded petrol and the reduction of sulphur in diesel and petrol will have a significant positive environmental impact.

"For SAPREF-produced fuels alone this will now result in a reduction of about 2 000 tonnes annually of lead additive and 12 000 tonnes of sulphur dioxide a year being emitted through vehicle exhausts."

The new SAPREF plant was completed without an injury resulting in lost time. Safety statistics show that performance was three times better than international benchmarking standards and is six times better than the average South African project in the petrochemical industry. The LION teams were given motivational inspiration when soccer personality Jomo Sono paid several visits to the site to boost the safety culture and teamwork.

The project exceeded its BEE procurement target, with R150 million of the South African-based capital expenditure going to BEE companies.

"As part of the way we do business, we not only identified BEE opportunities for the equipment suppliers, but also for the on-site installation contractors, which ultimately resulted in 78 percent of the project's capital spend within the country," said Pearce.

BEE spend amounted to 31 percent of total procurement and contract spend, exceeding the advance commitment of 20 percent for 2004 and 25 percent for 2005.

"We also sought to provide employment opportunities for local residents and to ensure skills transfer during the project. During the construction of the LION project, 70 percent of the 1 455 people employed were from neighbouring communities." said Pearce.

Minister Hendricks said: "I am also pleased to note that accompanying the investment SAPREF undertook, one of our key objectives both as Government and our industry as outlined in the Liquid Fuels Charter, is that procurement spent on Black Economic Empowerment (BEE) companies has been complied with during the upgrading of your refinery, and that also needs to be commended.

"It is also important to note that such investments are paramount not only to the extent that they present opportunities for participation by previously disadvantaged South Africans in our industry, but also to the extent that such investments have in the creation of related industries that provide goods and services with local content, and by extension creation of jobs for our people. And it is only through such exemplary cooperation we see here today that others within and outside our industry could be inspired and follow in your footsteps," she said.

Pearce commented that a project of this magnitude could only have been accomplished with the effort of an exceptional team. Under the leadership of Tjalling Terpstra, SAPREF established a dedicated project team for the construction, flawless start-up and ongoing operation of the plant. Pearce said that of the 8000 field welds completed, not one needed repair after x-ray inspections. This was a testimony to the quality of work delivered by the welders from Durban of which 45 % were from the immediate neighbourhood areas.

Pearce recognised the role Fluor Daniel, the managing contractor, played to ensure the success of the project and added that several South African contractors played key roles in the achievement of an excellent construction quality and safety record.

Social investment was always at the forefront of the project. Timber in which components were packed was donated to the Umlazi Technical College for Carpentry students to use in making tables, whilst the link with soccer was carried through by supporting a local community-initiated soccer development programme. After the conclusion of the LION project, almost-new furniture helped equip the Merewent Community Police Forum office and the Sunshine Trauma Unit which provides support and advice mainly for victims of domestic violence, rape and hijacking.

The construction statistics tell an interesting story: the LION project used 312 piles, 4 000 cubic metres of concrete, 900 tons of steel, 24 km of pipe joined with 6,3 km of weld, 360 km of cable, 90-something pieces of mechanical equipment, controlled by 460 instruments. Everything arrived on time, in the right sequence and fitted remarkably well, as shown on the 7 296 drawings.

With the LION project on-line, in a continued vote of confidence in the future, in 2006 SAPREF's plans are to invest around R360m in its operations covering pipeline refurbishment, health safety and environmental and plant upgrades.

For more information contact:
Prudence Mbatha
SAPREF Communications Officer
Tel: 031-480 1303
Fax: 031-468 1111
Cell: 083 627 0802
email: mbathap@sapref.com