State-owned port and rail authority Transnet has warned of possible fuel shortages in South Africa if the country continues to grow its reliance on imported fuels.
In a presentation last week, seen by Bloomberg, Transnet highlighted that the increasing dependence on imports leaves South Africa’s fuel pipeline system susceptible to interruptions that “may result in temporary fuel shortages.”
This follows a spate of refinery closures in recent years, starting with the Astron Energy plant in June 2020, which has seen a dramatic rise in the country’s need for imported propellants.
In 2019, South Africa only shipped in approximately 30% of all its petrol, diesel, and jet fuels and housed six refineries which together produced in the realm of 713,000 barrels of petroleum per day.
Fast forward to 2024, the country now purchases around 70% of its fuel requirements from international suppliers and produces under 370,000 barrels of liquid gold per day, according to the Fuels Industry Association of South Africa.
This means the domestic fuel industry, and by extension, fuel availability, is far more sensitive to geopolitical risks than just five years ago.
Dr. Rod Crompton, visiting adjunct professor at the Wits School of Business’ African Energy Leadership Centre, told 702 that a fuel shortage fortunately isn’t an immediate concern as the country’s existing infrastructure adequately buoyed demand in recent times.
“The big change [since 2020] is that the two refineries in Durban closed, and so, instead of petrol, diesel, and paraffin coming out of those refineries and going up the pipeline to Heidelberg, that equivalent amount had to be imported, and it has been imported,” said Crompton.
“That substitution for the refinery output is important and is going up the pipeline, and we haven’t had interruptions so far. It’s partly a testament to the skill of the oil companies and Transet pipelines… it’s quite tight to do this, but they’ve managed to do it pretty well so far.”
Be that as it may, South Africa isn’t completely out of the woods yet, and petrol scarcity remains a real threat given the current situation at the country’s ports.
The Transnet-run Durban port where most of South Africa’s imported goods arrive is highly prone to problems and delays, seeing tankers wait in the waters outside it for weeks on end before they can offload their cargo and move on to their next destination.
Furthermore, a decade ago government set out to build a multi-product pipeline designed to efficiently pump various fuels over the 500km route from Durban, KwaZulu-Natal to Heidelberg, Gauteng, with large accumulator tanks installed at each end to store ample amounts of these products.
Crompton pointed out that the tanks in Heidelberg have already been constructed and are ready to be put to work.
However, when Transnet tested the newly built storage tanks in Durban by filling them up with water, they fell over. This happened “a couple of years ago” and Transnet is now in the process of building these tanks “for a second time,” said Crompton.
“It’s good that Transnet recognises the problem [of potential fuel shortages], but in media coverage, it seems that Transnet didn’t recognise that it itself is a big part of the problem,” said Crompton.
Motorists can rest easy knowing that South Africa probably won’t run out of petrol and diesel in the coming days, though a shortage isn’t completely out of the realm of possibility for as long as the nation remains dependent on imports to satisfy the vast majority of its fuel needs.
Crompton notes that government should fast-track private sector participation in Transnet activities as well as incentivise electric-vehicle (EV) uptake if it hopes to allay these fears.
When asked about the chances of an imminent fuel shortage in South Africa, the expert said it “depends on a lot of things.”
“One of the issues is the investment by the private sector in and around Durban harbour in new tankage and new loading facilities and so on, but Transnet again is the problem. They’ve been in the process of leasing that land for a long time now, and still no solution,” said Crompton.
“It also depends on government policy and economic growth, if you have a spurt in economic growth, that will increase demand, but, if the government stopped its negative reaction towards electric vehicles, then we would have an uptick in electric vehicles that would reduce the demand for liquid fuels.”
Sapref Refinery in Durban, KwaZulu-Natal
Beacon of hope
The Minister of Mineral and Petroleum Resources in a meeting with the Fuels Industry Association of South Africa this year indicated that government is going to revive the Sapref and PetroSA refineries from the dead, which boast a combined 225,000-barrel-per-day capacity, in a bid to safeguard the country’s fuel supply from international shocks.
The Sapref facility was closed down in February 2022 after it suffered severe flooding which would have taken several years and billions of rands to repair.
Once owned by energy giants BP and Shell, government purchased the facility for a symbolic R1 earlier in 2024 intending to bring it back online in the coming years and upgrade it to produce cleaner fuels.
Similarly, the state-owned PetroSA plant was put on a “maintenance and care programme” in November 2020 after a shortage of available gas and condensate feedstock, and it has remained shuttered ever since.
Government is actively looking for new suppliers to support the resuscitation of the gas-to-liquids (GTL) refinery.
In a recent Parliamentary Q&A, the Minister of Mineral and Petroleum Resources said: “The Central Energy Fund will continue with the reinstatement of the GTL Refinery since other sources of gas and condensate could be found to process through the GTL Refinery, for example, the production of the remaining gas in Block 9, and additional gas within the block through further exploration efforts.”
“Block 11B/12B could also still be developed by other industry players, including oil majors on the same scale as TotalEnergies who might have a better risk appetite, and economic hurdles for development projects, such as the weighted average cost of capital etc.”
Crompton warns, however, that the restoration of these refineries will not be without their challenges.
“There’s the old Sapref refinery that the government-owned Central Energy Fund bought for R1, but what they didn’t say is they also bought billions of rands of environmental liability,” he said.
“I believe the Minister of Mineral Resources and Energy has been talking about revamping that refinery and revitalising it. Remember, it was flooded, and BP and Shell decided not to fix it after the floods, so [government] has to fix that and then get it working and then invest for the cleaner fuel specification, so most people in the industry are very sceptical that government would be able to do that. If you look at the way PetroSA has behaved, its corporate record is not too promising.”
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