Glynnis George, the exuberant front desk manager at Engen Refinery (Enref), greets all visitors as though they are long-lost friends.
Indeed, most of them are friends. She has worked there for 25 years - that's half the life of the refinery - and today she embodies much of the culture of the operation; she's warm, people-focused and open.
She has also witnessed more change than most. From the days of jobs for life, oil embargoes, sanctions and Mobil's disinvestment to the era of the Official Secrets Act, razor wire, the threat of political action by Umkhonto we Sizwe - the ANC's military wing - and worker unrest to the time when Engen welcomed a new political dispensation and, in 1998, new shareholders.
Behind the scenes, the engineers toiled to ensure the refinery kept abreast of new improvements in refinery technology and processes. Capacity was raised and environmental performance, yields and efficiency improved. It was vital to ensure that refinery production met the needs of an ever-changing market. The hi-tech developments in the petrochemical industry move at a staggering pace; there will be more advancement in the next five years than there was in the past 50 years.
But the biggest changes have been to the culture of the company. "Twenty-five years ago, when I was the first coloured woman to be employed here, life was formal, secretive and technology focused," says George.
Secrecy was a way of life. As a young process engineer, Wayne Hartmann, now the refinery general manager, was not permitted to know what crude oil was running and where it came from.
Today the refinery is a very different place. Engineers still dominate, but the company has realised that the success of the refinery depends on the productivity and morale of its people and the transparency of its relationship with the public. Transformation of the culture was fast-tracked towards the end of the apartheid years. Enref's owner Engen, which was no longer tethered by national secrecy legislation, was able to lift the shroud of mystery and invite people to see its operations.
The economic imperatives of running an efficient and profitable operation, which over the past five years contributed R4,8bn from capital expenditure and operational expenditure to GDP, remain. But increasingly management attention has focused on the environmental, social and people issues related to the refinery.
"We've gone from a technology-centric to a people-centric operation," says Hartmann. "We don't operate in a vacuum. The people who work for us and live around us will be part of our success in the next 50 years."
Much energy has been invested in establishing a set of values, motivating and training employees and instilling in them a sense of pride in their work and their contribution to the company. This altered focus has helped to deliver results in many critical areas. The refinery has had significant success in improving its environmental and safety standards. It has cut the release of sulphur dioxide by 65%, particulate emissions have fallen dramatically and volatile organic compounds have decreased.
Productivity problems, caused partly by unreliable technology, are being addressed by the upgrading of technology. This will reduce the amount of downtime. Technology problems resulted in forced shutdowns in the 2001/2002 financial year and ultimately cost the refinery an unexpected R200m that year.
Progress has been made towards improving the company's acrimonious relationship with the "fence-line" communities that surround it. "There is no reason why we should not co-exist," says Hartmann. "Environmental issues have dominated our strategy for many years and there are few areas where we still negatively affect the community."
Enref believes it has taken its focus on sustainable business further than most companies.
Enref, some would argue, had little choice. The refinery is situated on a barren stretch of land in Wentworth valley, south of Durban harbour, and was the first of SA's four refineries to be built. It was established at a time when the valley was deserted, except for snakes. One of the first people employed by the refinery was a snake catcher from Mexico, who was commissioned to rid the area of puff adders and cobras.
As settlements sprang up around the refinery - it is now surrounded on three sides by lower-income communities - barbed wire fences, limited employment opportunities and a disregard for the harmful pollutants it expelled into the air antagonised the community. The company's relationship with the public was poor throughout the 1970s and 1980s, ultimately coming to a head in the mid-1990s.
The turning point came during a protest outside the refinery. The general manager at the time, Peter Dent, opened the gates and walked out to face the angry crowd. It was a frightening situation, but the start of a long dialogue that would result in the Environmental Improvement Programme in 1998.
Enref's shift in focus came at a time of rapid change and unprecedented pressure. As with other SA companies, the refinery has had to focus on efficiency and cost cutting to survive and compete. Improved fuel specifications and environmental standards will require big process changes and new technologies to be added. Growth in the demand for fuel, locally and in the Southern African Development Community (SADC) region, will require further increases in capacity. At the same time, the huge capital expenditure necessary to meet environmental expectations and government's pending antipollution legislation is a big challenge for Enref and its counterparts in the petrochemical industry.
"Running a refinery is not a licence to print money," says Hartmann. "The price at which we buy crude oil is market related (and Opec influenced) and the price at which we sell the refined product is regulated. Within those confines, margins are tight."
Upgrading the refinery to reduce emissions such as sulphur dioxide, nitrous oxides and volatile organic compounds is a challenge. Though Enref has been successful in reducing emissions, the provisions of the Air Quality Management Bill, which requires that refineries reduce their emissions, and the clean fuels legislation remain burdensome. The clean fuels legislation stipulates the virtual removal of lead from petrol by 2006 and the lowering of sulphur levels in diesel. Sulphur levels must be further reduced by 2010. "The trouble with this process is that these targets are not clear," says Hartmann.
Consensus has not been reached on how the upgrades, which will cost the refining industry R10bn-R15bn, will be funded.
The minerals & energy department, which is open to the idea of discussions with the petrochemicals industry, will need to balance a variety of considerations as it evaluates the options. It may seem to be in the national interest to provide financial support to an industry that contributes more than R30bn/year to the economy, maintains about 9 000 full-time jobs and saves the country about R18bn/year in foreign exchange. But how sustainable is the industry in the long run? What of new technologies such as fuel-cell technologies that are unlikely to use the products produced by refineries? These challenges must be addressed.
Meanwhile, more change looms on the horizon. In February this year it was announced that Sasol and Petronas, which holds an 80% stake in Engen, reached an agreement to set up a joint venture in which each would hold 37,5% and an empowerment consortium the remaining 25%. The deal will cover Sasol's and Engen's retail, commercial and wholesale fuel businesses as well as Sasol's interest in the Natref refinery at Sasolburg and Engen's Enref in Durban. It will also include Engen's empowerment partner Worldwide African Holdings and Sasol's partner, Exel Petroleum. Details of the deal have not been disclosed.
The deal is subject to regulatory approval and nothing is certain. There is a chance the competition authorities will insist that one of the refineries is sold to prevent the development of a monopoly in the refining business.
For now Enref has the luxury of spare capacity. Many of its more than 100 products are exported, mainly to the African east coast and southern Asia region. But changes in the international market could affect this export business. A new refinery in India, which produces six times the capacity of Enref and is the biggest in the world, could threaten some exports.
Hartmann is pragmatic. "The number of vehicles on the road in the SADC region will double or treble over the next two decades. We have the infrastructure in place to plan ahead, move with the times and meet the needs of our market," he says.
Last year, for the first time in four or five years the industry showed signs of growth. Petrol sales grew by 1%, while diesel sales grew by 4%. Hartmann says this suggests the pace of the economy is picking up, which is good for the oil business. The rocketing price of oil could change this, but today the refinery is leaner and meaner and prepared for any eventuality.
