Ins and outs of South Africa’s new state-owned petrol company

The South African National Petroleum Company (SANPC) officially opened its doors on Wednesday, 14 May 2025.

The SANPC is South Africa’s newest state-owned entity (SOE) and was formed by merging three separate subsidiaries of the Central Energy Fund (CEF) – iGas, PetroSA, and the Strategic Fuel Fund (SFF).

SANPC’s mandate will be ensuring energy security, driving new technologies, and developing and enabling essential infrastructure.

It is also expected to oversee strategic planning, coordination, and governance of the country’s petroleum resources.

The inner workings of the SANPC were shrouded in mystery since it was first announced, with government only recently starting to explain how things are going to work.

Rather than amalgamating the three entities into one, the SANPC will operate on a lease and assignment model, reports MoneyWeb.

This is a legal arrangement in which one party transfers its rights and obligations to another, essentially allowing it to rid itself of its original responsibilities to pursue new ones.

Key leases and contracts were subsequently transferred to the SANPC from its various divisions, including:

• PetroSA’s out-of-commission Mossel Bay refinery
• SFF fuel tank farms in Milnerton and Saldanha
• Fuel depot in Montague Gardens, Cape Town, jointly owned by SFF and BP
• Cash and various assets owned by the SFF and PetroSA in Ghana and Sudan

In taking on these assets and liabilities, the SANPC will reduce the load on iGas, PetroSA, and the SFF.

In doing so, government believes its newest SOE will be able to revive the country’s ailing fuel sector.

Archaic fuel regulations and natural disasters slowly saw the country’s fuel refining industry fall into disarray in recent years.

The company was once home to six refineries with a combined output of 713,000 barrels per day. Today, it only houses half the number of facilities that pump out 368,000 barrels every 24-hour cycle.

As a result, approximately 35% of South Africa’s fuel requirements are currently met by locally produced products, compared to a substantial 80% in 2010.

“We are laying a foundation for a high-performing, future-fit national energy champion that will be agile, efficient, and capable of delivering long-term value for all South Africans,” said SANPC chairperson Sipho Mkhize.

“SANPC is not just another company. It is a national asset. It embodies the government’s vision for a modernised, integrated, and impactful energy sector player.”

Four pillars of success

To achieve its goals, the SANPC’s core business will be built on four operational pillars: upstream, storage, midstream, and downstream.

Upstream operations is the earliest stage in the oil and gas industry.

It comprises the exploration, drilling, and extraction of raw hydrocarbons from underground or underwater reservoirs.

Meanwhile, storage operations involve the management of the state’s strategic crude oil stockpile and commercialising crude oil storage facilities.

The midstream business touches on the transportation, storage, and wholesale marketing of oil and gas.

It serves as the middle step between the extraction (upstream) of oil and the refining and sales (downstream) thereof.

The SOE will also have downstream operations, which include refining crude oil and processing natural gas. 

In addition, these operations involve distributing finished products like gasoline, diesel, and petrochemicals to end users.

The SOE noted that it has projects worth about R67 billion in the pipeline, and that it would be capable of extracting R1.5 billion a year through “synergy optimisation.”