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Burgan breaks ground on Cape fuel storage facility

Scale-Model of the planned Burgan Cape Terminals Facility. Scale-Model of the planned Burgan Cape Terminals Facility.

Burgan Cape Terminals officially broke ground for the construction of a new, independent fuel storage and distribution facility in the Port of Cape Town last night. This after a bitter legal battle with Chevron was settled earlier this year.

The development will see a R650m investment in the first two years. It is a joint venture between Thebe Investment Corporation, BBBEE company Jicaro and Rotterdam-based international terminal operator VTTI.

This is the first project under the National Government’s Operation Phakisa to be implemented.

The ground breaking ceremony was presided over by the State Secretary for Economic Affairs and Minister of Agriculture of the Netherlands, the Honourable Mr Martijn van Dam. The Dutch Prime Minister was slated to break ground on the project, but was obliged to return to the Netherlands after the terrorist attacks in Paris on Friday.

Burgan Cape Terminals CEO Muziwandile Mseleku said, “The facility will ensure security of fuel supply by adding greater flexibility and choice to a strained provincial storage market. It will also play an important role in opening up a previously closed market for emerging, black-owned independent fuel suppliers.”

He went on to assure, “All of this is good news for the country and for the economy, and most especially for all fuel consumers.”

“This is an important initiative that will further entrench cooperation and partnership between the Netherlands and South Africa,” said van Dam. “We strongly believe that together we can create opportunities that will benefit both countries and their people.”

Rubel Yimez, Global Head of Strategy and Global Development of VTTI said, “The ready uptake of the facility by customers makes it clear that there is growing local demand for refined petroleum products in the region. We are pleased to be able to share our extensive global experience with our local partners and look forward to working together.”

Vusi Khanyile, Executive Chairman of Thebe Investment Corporation said, “South Africa is likely to be energy constrained for many years to come, so the more contingencies we put in place to address this energy challenge the better. Secure and plentiful energy means a growing economy and much-needed jobs. We are proud to be part of this exciting development.”

Burgan Cape Terminals was awarded a 20-year lease by Transnet for the development of the fuel storage facility.

Siyabonga Gama, Acting Group Chief Executive of Transnet said, “We are tremendously excited to welcome Burgan Cape Terminals to the Port of Cape Town. This is an important innovation and addition to our port infrastructure programme and will contribute greatly to the country’s overall competitiveness, access to energy ad commitment to transformation.”

The terminal is due to be complete in 18 months.

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Economic impact

The terminal will bring additional competition, supply security, improved oil infrastructure and flexibility in oil supply. The resulting cost optimisation will have a structural net economic benefit to the province.

It is in anticipated that the construction phase of the project will create around 130 contract jobs with an average duration of 22 months. It will also create about 20 operational jobs once the facility is active.

Operational expenditure in the first few years of production has been estimated at approximately R40m and will increase in line with throughput.

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The fuel storage facility

The fuel storage facility in the Cape Town Harbour will be multi-purposed and used to store and distribute both locally produced and imported fuels.

Companies will ‘rent’ space from Burgan to store their fuel products. Burgan has already signed long-term (10 year) contract with oil companies that jointly aim to throughput up to 805,000m3. This includes a contract with 100% black women-owned Gulfstream Energy, which signed a three-year contract to store 120 million litres per annum. Shell will also be an anchor tenant, extending the energy major’s global relationship with VTI and longstanding partnership with Thebe.

Burgan’s state-of-the-art truck loading facility will allow for efficient and swift distribution to end-users with limited impact on the surrounding.

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