The Department of Mineral and Petroleum Resources has published its draft Strategic Petroleum Stock Policy for public comment.
The new policy aims to address concerns that were raised during the recent global fuel crisis brought on by the war between the United States and Iran.
The conflict disrupted oil production and shipping in the Middle East, leading to massive price increases and concerns about possible shortages.
In South Africa, this led to panic buying, with some petrol stations in remote areas limiting sales to private and commercial buyers.
The draft policy is intended to fix these issues while also addressing broader concerns about the country’s fuel capacity.
This includes the loss of a considerable portion of the country’s fuel refining capacity, regulatory gaps in the private sector, and vulnerabilities in the supply chain.
Since South Africa is a net importer of crude oil and refined petroleum products, it is particularly vulnerable to geopolitical events, international supply chain disruptions, and price shocks.
The draft policy establishes a “robust framework” for the mandatory holding of emergency reserves, as well as the procedure that should be followed when an emergency is declared.
The primary objective is to ensure that South Africa is ready for future crises by maintaining a buffer of physical fuel stocks that can be released during an official state of emergency.
The department said it wants to build a holding of emergency fuel reserves, while also making it a mandatory policy for private manufacturers and wholesalers.
The policy can be broken down into these key points:
- The state will establish a reserve of crude oil equal to 90 days of net imports:
- Manufacturers and wholesalers must have a stock of refined products, such as petrol, diesel, or jet fuel, for 14 days
The department emphasized that these strategic reserves are specifically intended for catastrophic events, not minor operational inefficiencies.
It said that the Minister of Mineral and Petroleum Resources would be the authority empowered to trigger the release of these stocks.
The stock release would be triggered at different levels determined by the minister, according to BusinessTech:
| Trigger level | Category | Description / Threshold | Primary Action |
|---|---|---|---|
| Level 1 | Supply Alert | Loss of 20% of national refined product supply (e.g., refinery outage or single port closure) for more than 14 days. | Voluntary industry stock sharing and SANPC readiness audit. |
| Level 2 | Supply Disruption | Loss of 40% of national supply with total depletion of commercial industry mandatory stocks, the 21-day safety buffer. | Initial drawdown, this is a restricted release of stocks to essential services and key economic hubs. |
| Level 3 | National Emergency Declared by Minister | Severe global supply shock or total failure of the import value chain impacting more than 50% of supply. | Mass drawdown: this is a wide market release and implementation of fuel rationing. |
| Economic | Price Stability | Unprecedented price volatility reaching $145 per barrel threatening GDP growth. | This is a strategic sale of products in a competitive auction |
The policy recommends that the government maintain a reserve to cover 90 days of net imports, primarily in the form of crude oil stored at the State-Owned Saldanha Bay facility.
The 14-day reserves maintained by manufacturers and wholesalers would then act as an additional safety net.
“This dual responsibility ensures that the state manages long-term strategic security and cushions the economy against global supply chain shocks while the private sector contributes to immediate downstream resilience,” it said.
The governance and funding of this system would be anchored by the new state-owned petroleum company, South African National Petroleum Company (SANPC).
SANPC was formed from a merger between SFF, PetroSA, and iGas in 2025.
South Africa needs fuel reserves
The department noted that South Africa’s petroleum stocks have insufficient physical reserves, jeopardising the country’s fuel security.
It highlighted that the closure or conversion of multiple domestic refineries, such as the Engen and Sapref facilities, has shifted South Africa from a crude-importing nation to a petroleum product-importing nation.
“This leaves the economy exposed to risks such as fuel supply shortages in emergency situations without a buffer against external shocks and currency fluctuations and short-term supply logistics,” it said.
It added that dependence on long shipping routes and specific maritime chokepoints, such as the Strait of Hormuz, exposed the country to an estimated loss of R1 billion for every day of total fuel unavailability.
It currently takes anywhere from 21 to 42 days for imports to reach South Africa’s ports of entry.
The full process is even longer, as it takes another 10-14 days to offload, refine, and transport the products from coastal refineries to inland regions.
“This has necessitated a policy shift towards an agile and integrated stock holding model that will provide the necessary safeguards during emergencies,” it said.
The department also said there has been a distinct lack of mandatory stockholding obligations on the private sector, leaving the state as the sole guarantor of supply during disruptions.
“This is a burden the state cannot carry alone, especially given fiscal constraints,” it said.
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