The Department of Minerals and Petroleum Resources (DMPR) will reinstate two major fuel refineries in South Africa to reduce the country’s reliance on imported propellants.
In 2019, South Africa imported approximately 30% of its fuel requirements, and fast forward to 2024, it now purchases 70% of all its petrol, diesel, and jet fuels from international suppliers, according to Fani Tshifularo, Executive Director of the Fuels Industry Association of South Africa (FIASA).
The Central Energy Fund (CEF) recently purchased the Shell/BP-owned Sapref fuel refinery in Durban, KwaZulu-Natal for a reported R1 following the shutdown of the 180,000-barrel-per-day plant in 2022, a move it said will support its growth strategy following the decline of local refining capacity.
Similarly, in early 2023, the state-owned Petroleum Oil and Gas Corporation (PetroSA) put out a request for proposal for the development, refurbishment, modification, upgrade, funding, and/or operation of its gas-to-liquids refinery in Mossel Bay.
The 45,000-barrel-per-day facility was shuttered in 2020 after suffering from a shortage of feedstock.
During a recent sitdown, the Minister of Minerals and Petroleum Resources told FIASA’s Tshifularo that his department is in the process of reviving the Sapref and PetroSA refineries with the goal of bringing South Africa’s fuel production capacity back to its former glory.
“The minister indicated that they are bringing [the Sapref refinery] back, and also the PetroSA refinery is going to be brought back,” said Tshifularo in an SABC News interview.
“We indeed support such initiatives, particularly if there are investors who are interested in putting their money into those projects, because it will help a country like South Africa where the importing markets are far away from us.”
The latest statistics from the Observatory of Economic Complexity reveal that Nigeria, Saudia Arabia, Angola, Ghana, and the Republic of Congo are the biggest suppliers of crude petroleum to South Africa, responsible for a collective R71.05 billion in imports in 2022.
Tshifularo notes that it takes an average of three weeks for one shipment of propellants from these countries to arrive at our ports.
“If we have got our own refineries, at least we can store crude oil in large quantities and we don’t have to wait for finished products to land in our own ports,” he said.
Peak output for South Africa’s fuel refineries. Source: Bloomberg
A major hurdle remains funding these initiatives.
FIASA has urged government to consider shouldering half of the cost of the refinery refurbishments while private investors cover the other half, which the association believes is the best way to achieve the DMPR’s goals.
“We’ve been discussing with government for a long time to [follow an] approach similar to what has been done in other countries such Australia, where the government has met the investor halfway to make sure that they remain in the refining business,” said Tshifularo.
“In our case, the immediate pressing need is for those refineries to be supported in terms of being allowed to recover some of the cost of the investment, because that is going to go a long way to reducing the burden on the investors who are putting billions of rands into these refineries.”
Cleaner fuels on the cards
Alongside the revival of the large refineries, the facilities will be upgraded to produce cleaner fuels with lower Benzene content in petrol, said Tshifularo.
This could be a massive boon for the car market.
Fuels currently sold in South Africa are not up to scratch with international standards which has seen many modern cars, especially hybrids and petrol autos that adhere to the latest European emissions regulations, not being introduced to our roads.
Automakers including Ford, Toyota, and VW have all stated that they can’t launch their most cutting-edge products in the country due to poor fuel standards as they would be unable to perform at their peak.
These “clean” fuels are in the pipeline to be introduced in 2027, said Tshifularo.
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