South Africa’s increasing reliance on fuel imports poses supply risks that require enhanced infrastructure for storage and transportation, according to the state-owned logistics firm, Transnet SOC Ltd.
The country, which is Africa’s most industrialized, imported 61% of its petroleum products in 2023, a significant jump from just 22% four years earlier. This shift is largely due to the closure of several refineries, Transnet noted in a recent presentation.
The growing dependence on imports has made South Africa’s fuel pipeline system vulnerable to disruptions, which could lead to temporary fuel shortages. To address this, Transnet is planning investments in Durban’s port, including the construction of fuel storage tanks, a fuel import terminal, and a new jet fuel pipeline.
The reduction in refining capacity is due to a combination of factors, including industrial accidents and the implementation of stricter low-sulfur fuel standards that require costly upgrades to aging plants. The 2021 closure of the Engen oil refinery and the lack of feedstock for PetroSA’s gas-to-liquids plant have also limited domestic fuel production.
Traders have seen opportunities in this situation. In February 2023, a unit of Vitol Group agreed to acquire Petroliam Nasional Bhd.’s 74% stake in Engen, the largest fuel station chain in South Africa. Additionally, TotalEnergies SE has plans to expand its fuel trading operations in the country.
