Travelling both by air and road in South Africa could become a lot more challenging because of the country’s overreliance on international fuel.
Aviation expert Des Latham told ENCA that the knock-on effects of not having enough local refinery capacity paired with global supply chain issues and an overreliance on importing fuels could lead to further trouble for motorists.
This follows fuel rationing at Cape Town International Airport that has put pressure on seat capacity for popular routes. The airport is currently awaiting a shipment of jet fuel that has been caught in bad weather – stalling its travel.
An instance like this can cause knock-on effects on other shipments as the fuels are purchased and traded months in advance – and due to not being able to gear up refineries quickly enough, the country needs to wait for another shipment to dock, said Latham.
“Local refineries that produce around 100,000 barrels in South Africa, such as the Natref refinery in Durban, are no longer viable – they don’t make enough money.”
In August, South Africa’s biggest fuel producer Sasol restarted its refinery after a shutdown of operations as it awaited a shipment of products. The shutdown meant that the whole of South Africa’s oil-refinery fleet was offline.
This leads to using imported petrol (95 and 93) as well as other fuel products, Latham added. South Africa only produces very small amounts of some products.
“This has become an issue because we are at the bottom end of Africa, and as supply chain issues evolve, we can not secure our own fuel supplies locally at the levels we need,” he said.
“This is not anything new, but when we run into a limitation, there are knock-on effects.”
Latham said that with supply chain issues around the world and being so far away from major refineries in Europe, South Africa is the “last to chew on the bone.”
Petrol price
International oil prices are on a downward trend, says Nedbank. However, the latest snapshot from the Central Energy Fund (CEF) shows that diesel is expected to increase by between 20 and 25 cents per litre, whereas petrol is expected to decrease by roughly R1.00.
According to Andre Botha, a senior dealer at financial consultancy firm TreasuryOne, the disparity lies in the limitation of supply globally paired with high demand.
If the war between Russia and Ukraine, which has sparked the global energy crisis, does not ease and supply remains constrained among oil-producing countries – South Africa could see higher diesel prices “for a while”, said Botha.
Earlier this year in May, Bloomberg reported that energy consultancy Citac said that South Africa’s monthly petroleum product imports would triple by next year as domestic refineries close.
With the closure of refineries – there will be more petrol and other fuels being imported, said Citac. Product pipelines from the port of Durban where fuel is imported, may need to be modified to adjust to more supply, it added.
The South African Petroleum Industry Association noted that if plant closures continue, a dedicated shipping route will be needed to accommodate adequate imports.
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