South Africa prepares its largest strategic oil reserve since apartheid

South Africa proposes covering 60 days of demand with state reserves and requiring minimum inventories from wholesalers and fuel importers.

South Africa is considering expanding its strategic oil reserves for the first time in several decades to reduce its exposure to international supply disruptions.

The proposal was presented in a draft energy policy open for public consultation. The document proposes that the State maintain stocks equivalent to 60 days of national consumption, while licensed wholesalers and importers must keep sufficient inventories for 21 days.

According to the planned scheme, 70% of the reserves would consist of crude oil and the remaining 30% of refined products such as diesel, gasoline, or aviation fuel.

Strategic oil reserves would reach 36 million barrels

Based on an estimated demand of 600,000 barrels per day, 60-day coverage would represent nearly 36 million barrels.

The volume would involve an investment of billions of dollars and require new financial mechanisms to acquire, store, and guarantee inventories.

Therefore, the National Treasury and the state-owned South African National Petroleum Company must prepare financing instruments to support the policy.

Furthermore, the proposal contemplates that reserves may be released when the Government declares an emergency due to severe supply disruptions or other events considered catastrophic.

Saldanha Bay would regain its energy security function

South Africa created its main storage facilities during the 1970s when international sanctions limited the apartheid government’s access to the global oil market.

During that period, the Saldanha Bay complex on the Atlantic coast was developed with a storage capacity of up to 45 million barrels.

The new policy plans to use state facilities in Saldanha Bay and Milnerton to manage part of the strategic stocks.

This change would return a central role in the country’s energy security to the infrastructure after years of inventory reductions.

The decline in refining capacity increased foreign dependence

In recent years, South Africa has lost nearly half of its refining capacity. As a result, the country is increasingly dependent on imports of finished fuels.

This dependence increases exposure to maritime delays, price fluctuations, and blockades on essential energy trade routes.

Additionally, low-sulfur fuel regulations planned for July 2027 will require additional investments in aging refineries. Without these upgrades, the need to import refined products could continue to grow.

Current reserves would be insufficient

An official estimate placed the State’s crude oil stocks at approximately 8 million barrels.

The Government also estimates it needs nearly 10 million barrels to replenish volumes sold or rotated in previous years.

These operations include the sale of 10 million barrels in 2015 when international prices were near eight-year lows. The operation was subsequently declared illegal.

The Strait of Hormuz increases the risk for South Africa

The proposal also responds to tension in maritime supply chains and the vulnerability of routes such as the Strait of Hormuz.

South Africa depends on maritime transport for much of the crude oil and fuels it consumes. Any prolonged disruption could affect transport, mining, industry, and power generation.

According to official estimates, each day without fuel availability could cause economic losses of nearly 1 billion rand.

Africa strengthens its storage capacity

South Africa is part of a broader trend in Africa to increase public control over energy supply.

Morocco announced investments to expand its storage facilities while Uganda works on expanding a state terminal. Ghana is also seeking to process more domestic crude in its refineries.

These initiatives reflect a common concern: reducing dependence on intermediaries, having emergency inventories, and responding more quickly to international crises.

For South Africa, the proposal represents a shift toward a preventive policy based on storage, regulation, and coordination between the State and the private sector.

Source: Rigzone

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