South Africa is embarking on a significant initiative to bolster its strategic fuel reserves, proposing a buffer of up to 81 days of national consumption. This move, outlined in new draft fuel security rules, revives a massive storage network originally constructed in the 1970s to safeguard against international sanctions. The country, once capable of refining its own fuel, is now entirely dependent on imported petrol, diesel, and jet fuel, making it highly susceptible to disruptions in global supply chains. The proposal comes amidst renewed geopolitical tensions, such as the US war with Iran impacting fuel shipments through the Strait of Hormuz, a critical route for African energy imports. The closure of South Africa's two major domestic refineries in 2022 further exacerbates this vulnerability.
The proposed policy outlines a dual responsibility for stockholding: the government will aim to hold 60 days of net-import reserves, primarily in the form of crude oil, to be stored at facilities like Saldanha Bay and Milnerton. In parallel, private oil companies and wholesalers will be legally mandated to maintain an additional 21 days of backup fuel, at their own expense. This will transition the country from a voluntary to a mandatory regime for private sector fuel storage. These 21 days for private companies are further broken down into 14 days of refined products and an additional 7 days of commercial fuel stockpiles. The total proposed stock levels amount to 90 days of net imports when including the government and private sector contributions.
The initiative is a direct response to recent supply shortage concerns fueled by the Middle East crisis, with estimates suggesting that a national unavailability of liquid fuels could cost South Africa's economy approximately R1 billion (around $61 million) per day. The Department of Mineral Resources and Energy (DMRE) projects that holding equivalent to 60 days of national fuel needs would require approximately 36 million barrels of strategic reserves, with about 70% consisting of crude oil. The government expects the National Treasury and the state-owned South African National Petroleum Company (SANPC) to develop financing mechanisms for these strategic reserves. Non-compliance by companies with stockholding obligations could lead to severe penalties, including imprisonment. The plan also anticipates the construction of new storage facilities as the country currently lacks sufficient capacity for the required refined strategic stocks.
