20-04-07

The crisis regarding inadequate fuel supply in South Africa will really be felt from May next year until 2009, Nhlanhla Gumede, the department of minerals and energy's deputy director-general of hydrocarbons and energy planning, told.
The fuel industry also says that the fuel supply chain will be under immense pressure by next year as the Petronet pipeline between Durban and Gauteng will have to be operating at its full capacity, while the planned new pipeline will only be completed by 2010.

The Moerane report on the fuel shortages of December 2005 recommends that the construction of the 61 cm Petronet pipeline should be speeded up. The current 30 cm pipeline can only supply 33 % of the inland demand, and this is a major weakness in the fuel supply system.
Gumede expects the pipeline to come on stream in phases, which will ease the pressure to some extent, but in the meantime fuel will have to be transported inland by road, which will require careful planning.

Engen's strategic refinery planner, Ian Baxter, said in reply to an enquiry that from next year we could expect greater numbers of fuel tankers on the roads to the north, which will put more pressure on the road infrastructure.
In addition to the limited infrastructure, South Africa's demand for fuel -- which is expected to be growing at an annual rate of 4.5 % by next year -- has reached the point where it exceeds the supply from local refineries, so more fuel will have to be imported. A measure strongly emphasised by the Moerane report to counter shortages is that emergency supplies of fuel should be stockpiled in certain vulnerable areas.

Gumede reckons that oil companies and wholesalers don't have sufficient storage capacity and they would be given financial incentives to expand their capacity. As part of the new licensing conditions governed by the Petroleum Products Amendment Act, wholesalers are required to keep a certain volume of emergency supplies.
The long-term solution is to build another inland refinery. PetroSA and Sasol have already shown interest in building another inland coal-to-fuel plant.

"We support that, especially in order to reduce our dependence on crude oil and to secure supplies, but they have still to submit an official application," Gumede said. It's possible that fuel retailers will in future be allowed to import fuel themselves.
"The challenge is to decide whether more refineries should be built in South Africa or whether we should import fuel at 5 cents to 10 cents a litre cheaper from a giant refinery in India."

To be increasingly dependent on fuel imports could lead to a crisis in the event of a problem, such as the Katrina hurricane in 2005. At the time, some countries, which were totally dependent on imported fuel, experienced shortages, which led to sharp price increases.
About 460,000 barrels of crude oil are imported daily to feed the local refineries, besides the increasing imports of already refined fuel to supplement the shortages. This exacerbates the country's trade deficit and puts increasing pressure on the balance of payments. It's estimated that South Africa will have to import 1.2 bn litres of fuel this year.