The government is looking to scale up domestic oil refining capacity through the newly launched state-owned SA National Petroleum Company (SANPC), a move that could reshape the country’s energy landscape and reduce reliance on fuel imports.
SA has modest oil and gas production but hopes to shore up exploration of these in the Orange Basin, which stretches from the Namibian coast into SA waters and holds an estimated 3.5-billion barrels of potential recoverable oil.
The initiative is part of a broader government strategy to enhance energy security, stimulate downstream investment and cushion the economy against global oil price volatility.
During the launch of the entity on Friday, mineral & petroleum resources minister Gwede Mantashe said the SANPC could position SA as a key player in Sub-Saharan Africa’s petroleum market.
“We cannot be complacent with a situation where local refining capacity accounted for about 80% of finished product consumed in 2010, compared to less than 35% in 2022,” Mantashe said.
“It is against this background that we fully support the SANPC in its concerted efforts to reinstate PetroSA’s GTL refinery in Mossel Bay and to rebuild the erstwhile South African Petroleum Refinery [Sapref] in Durban.”
The SANPC, which began operations in April, is a merger of three Central Energy Fund (CEF) subsidiaries: iGas, the Strategic Fuel Fund (SFF) and PetroSA.
“We made the decision to take three state-owned entities, merge them, and create an energy champion for the country. The issue for us is to focus on inclusive growth. This country can have between 5% and 8% annual growth if we use our oil and gas reserves. We have oil, we have gas, so we must exploit it,” Mantashe said.
The SANPC will take up a broad spectrum of responsibilities, including the exploration, production, refinement, marketing and sale of petroleum products, as well as supporting the growth and advancement of the country’s petroleum industry.
SANPC CEO Godfrey Moagi said the company has inherited assets from PetroSA and iGas, so it was “not starting from scratch”.
“The world has changed and it is very important that SANPC occupies the right space to secure energy for this country. The second issue is shareholder returns,” Moagi said, signalling that the company would be self-sustaining and not burden the fiscus, unlike other state-owned enterprises (SOEs).
“We need to make sure that we return money back to our government, give returns to the public and make sure we are sustainable as a company. We want a high-performance company. Another mandate is energy transition, but we need to make sure we cover our bases first. When it is time for us to look at the transition, we need to it in a responsible way.”
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