Saudi Arabia to invest in SA's oil industry

Saudi Arabia's Energy Minister Khaled al-Falih arrives at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) for a meeting. 

PRETORIA - Saudi Arabia's planning to build an oil refinery and a petrochemicals plant in South Africa.

It's part of a $10-billion (R138-billion) investment in the country. 

READ: S&P confident SA economy will rebound

The Gulf state's also interested in using our oil storage facilities and pumping billions of dollars into renewable energy.

It’s hoped a new refinery will ensure energy security for South Africa.

And that it will allow the country to supply crude oil and other petroleum products to the rest of Africa. 

Riyadh's also interested in using South Africa’s major oil storage facilities. 

“We think it’s symbolic for Saudi to store some of its crude in SA to serve SA’s needs and the region. It has to be operationally feasible. The crude oil needs to be turned over regularly and sold to other customers.

That’s what has worked in Rotterdam and Japan. We hope to replicate that if conditions would allow”, said Khalid Al-Falih, Saudi Arabia's energy minister. 

40% of South Africa's oil currently comes from Saudi Arabia and Construction is being led by its state energy company Saudi Aramco.

The exact location of the project will be finalised in the coming weeks. 

“You’ve mentioned Coega, but we’re also looking at Richards Bay. The final location of the oil refinery will be determined in the next few weeks when we finalise the MOU and the concept document after doing some preliminary studies”, said Jeff Radebe, South Africa's Minister of Energy.

READ: SA to invest R13bn in South Sudan oil industry 

Saudi Arabia is also expected to invest billions of dollars in South Africa’s renewable energy programme and talks are underway to invest in South Africa's state defence company, Denel.

Riyadh is hoping other countries will follow its lead and increase investment in South Africa.