South Africa is embarking on a strategy to boost its domestic oil refining capacity to decrease its dependence on imported refined petroleum products. Mineral and Petroleum Resources Minister Gwede Mantashe emphasized the government's commitment to strengthening energy security through increased refining capacity, strategic fuel stocks, and accelerated oil and gas developments, while also cautioning against a rapid shift away from conventional fuels. This initiative is largely driven by recent geopolitical conflicts, such as those in the Middle East, which have highlighted the vulnerabilities associated with importing most of its fuel. Currently, domestic refining infrastructure meets only 40% of South Africa's fuel requirements, with the remaining 60% being imported.
The government plans to revitalize the South African Petroleum Refineries (SAPREF) in Durban, which was acquired by the state-owned Central Energy Fund (CEF) in May 2024. The acquisition includes SAPREF's processing units, crude oil and finished product tanks, and pipelines connecting to the Port of Durban. Officials acknowledge that reopening existing facilities, many of which are crude oil refineries, would still rely on imported crude and thus not fully insulate the country from global price shocks. However, long-term plans also include potentially developing a new mega-refinery with a daily capacity exceeding 400,000 barrels, ideally supported by local feedstock like oil and gas discoveries in areas such as the Orange Basin.
While the revival of refining capacity is a strategic long-term goal, government and industry stakeholders, including the Fuels Industry Association of SA (FIASA), caution that it is not a quick fix for immediate fuel price pressures. Reopening or building refineries requires significant capital investment and years to materialize, with no immediate impact on current fuel costs, which are primarily driven by global factors. South Africa's refining capacity has halved over the last decade to about 250,000 barrels per day, down from an installed base of 703,000 barrels per day across six facilities. This decline has resulted in imports supplying over half of daily fuel demand, increased exposure to global price swings and shipping bottlenecks, and jeopardized approximately 5,400 direct and indirect jobs.
