Engen has announced it is closing its fire-damaged Refinery in Durban and converting it into storage facilities. Doctor Ngcobo African News Agency (ANA)
Engen has announced it is closing its fire-damaged Refinery in Durban and converting it into storage facilities. Doctor Ngcobo African News Agency (ANA)

The way South Africa manages its fuel supply is in for some major changes with concerns on the horizon

By Staff Reporter Time of article published Sep 27, 2021

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OVER the past several months, fuel processing companies in South Africa have made major announcements of the industry's future that could have far reaching ramifications.

Chief among the changes is the shift away from refining fuel in the country and the signal by the Department of Mineral and Energy Affairs that in two years only clean fuels will be allowed in South Africa.

These changes are set to disrupt the petrol, gas and chemical storage and transport industry in South Africa, according to founder of The Port of Gauteng, Francois Nortje.

Nortje is the developer of a private inland port in southern Gauteng, known as the Distribution Junxion Port of Gauteng and is envisioned to become South Africa’s most optimally located inland port due to its location, topography and scale.

The first announcement was by Transnet, that most of the chemical storage and dry bulk facilities currently in Durban Harbour is going to move to Richards bay harbour.

Then, two weeks ago the Department of Mineral and Energy Affairs announced that from 2023 only clean fuels will be allowed in South Africa.

According to Nortje, this will mean the end of fuel refinery in South Africa as we know it, and in future all fuels in the country will be imported pre-refined fuels and that Richards Bay will now become a major fuel import point.

Another significant development was that Engen has announced it is closing its fire-damaged Refinery in Durban and converting it into storage facilities.

“Shell Global also announced they are only going to concentrate on five refineries, therefore they are reviewing their refinery operations in South Africa which they own jointly with BP SA,” Nortje said.

Then Eskom announced that it is transitioning from using coal to gas, while Sasol made a similar announcement.

“In August, the Department of Public Works and Infrastructure invited public comments on the Draft National Infrastructure Plan 2050, where there was a section dealing specifically with freight transport,” Nortje said.

He raised concern, however, that only a passing comment about the petrol pipeline was made, no other paragraph in the National Infrastructure Plan 2050 dealt with storage and transport of the fuels gas and chemicals.

Giving global context to the imminent challenges concerning the impeding gas crisis, Nortje cited the United Kingdom.

“Currently, in the UK there is chaos in their gas market. Two major gas suppliers went out of business in the last week. Gas prices rose 300% in the last six months.”

Sky News recently reported that the UK’s storage capacity for gas is only 1% of its annual consumption whereas in France their storage capacity is 30% of its annual consumption. Therefore the UK is exposed to short term fluctuations in international gas prices.

“With global warming getting more serious day by day, most countries in the world are accelerating their energy transition to more green and renewable energy.

“This is going to cause major changes in fuel, gas and chemical usage and storage, but the National Infrastructure Plan is silent on the transportation and storage of these essential commodities.

“The petrol, gas and chemical storage and transport industry is a very secretive industry, and understandably so, considering that most of its activities are susceptible to security threats.

“Therefore most of the companies and institutions operating these fields require strict non-disclosure agreements from stakeholders and as a result very little information is available about this industry,” Nortje said.

He recalled that in the afternoon of 13 July 2021, less than 48 hours into the civil unrest that rocked parts of KZN and Gauteng, SAPREF declared a Force Majeure, partially because they ran out of essential chemicals to refine crude oil into petrol and diesel.

Between the Port of Gauteng in Ekurhuleni South Africa and Lubumbashi, in the DRC lives approximately 75 million people. The nearest harbours to this inland population are Durban and Richards Bay.

“The recent insurrection highlighted a serious threat to this population,” he said.

Nortje’s concerns are around storage capacity for petrol, gas and essential chemicals in Gauteng, and how these goods are going to be transported from Richards Bay to Gauteng.

He said that the National Infrastructure Plan for Freight plans for rail to be the saviour of South Africa’s freight future needed to be interrogated as freight planning especially storage and transport of petrol, gas and essential chemicals were essential for the success of South Africa.

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