State moves to boost strategic fuel stocks
• Aim is diversity of suppliers and lower supply risk
Mineral resources & energy minister Gwede Mantashe says the state is moving to boost strategic fuel stocks by ensuring third parties have improved access to storage facilities. The government has been under pressure to use more of the country’s strategic stocks to cushion hard-hit consumers, but this means security of supply could be threatened in the case of an emergency.
Mineral resources & energy minister Gwede Mantashe says the state is moving to boost strategic fuel stocks by ensuring third parties have improved access to storage facilities.
With global fuel prices hitting record highs in recent months, the government has been under pressure to use more of the country’s strategic stocks to cushion hard-hit consumers. But this means the security of supply could be threatened in the case of an emergency. The reserves are maintained for such instances brought about by disruption in global oil markets.
In a reply to a question by the DA published in parliament on Monday, Mantashe said the Strategic Fuel Fund, which manages the country’s emergency crude stocks, has purchased an additional primary depot in Cape Town that will provide open access to third parties to store their fuels.
“This will ensure that there is diversity of suppliers in the market place and therefore minimise supply risk,” said Mantashe.
The Strategic Fuel Fund has always leased storage capacity not required for strategic stocks and uses the income to cover the operational costs of maintaining these stocks.
SA is a net importer of crude oil and refined petroleum products, mainly from Saudi Arabia, Nigeria and Angola. Africa’s most advanced economy ran out of petrol and diesel in 2005/ 2006 and studies suggest any repeat would cost the economy at least R1bn a day, Reuters has reported.
DA MP Kevin Mileham asked Mantashe about the amount of strategic stock held by the state and private entities, and the steps taken and/or contemplated to ensure that a security of supply of refined petroleum products is sufficient to meet the demand of the market in SA “as it is experiencing a perfect storm with regard to refined petroleum products, arising from inadequate port infrastructure, ongoing strike action and labour issues in the ports, failure to have any kind of strategic reserve of refined products and a shortage of refining capacity due to the closure of various refineries”.
Mantashe said the Strategic Fuel Fund until recently held about 10-million barrels of strategic stocks on behalf of the state. The Strategic Fuel Fund stock is in crude oil form.
The current stock is down by about 300,000 barrels after some of the stock was recently sold to TotalEnergies for processing at the Natref refinery. The sale followed force majeure declared by the Nigerian supplier to TotalEnergies.
Mantashe said private entities keep commercial stock to cater for their share of the petroleum market.
“The Strategic Fuel Fund is implementing a strategy of developing and accessing infrastructure at import terminals and primary depots closer to the market. This will allow the Strategic Fuel Fund to respond to security of supply disruptions and ensure availability of emergency stock of finished products,” Mantashe said.
Mileham said on Monday the state’s handling of strategic fuel stocks was a concern. “I’m concerned that we are not holding refined product either at wholesalers or refineries as a strategic reserve for supply chain interruptions. This is particularly necessary in light of the loss of refining capacity in SA, which means we are increasingly reliant on imported refined products — which are obviously susceptible to all the vagaries of ocean transport.”
The move to boost thirdparty access to storage facilities could help, but it depends on how quickly the state can move.