Remarks by the Honourable Minister of Mineral and Petroleum Resources Mr Gwede Mantashe (MP), South African Fuels Forum, Melrose Arch, Marriott Hotel, Johannesburg
Chairperson of the Fuels Industry Association of South Africa, Mr Seelan Naidoo
Executive Director of FIASA, Mr Avhapfani Tshifularo
Captains of the industry
Representatives of state-owned entities
Distinguished guests
Let me start by expressing our appreciation to the Fuels Industry Association of South Africa (FIASA) and S&P Global Commodities for hosting and inviting us to this important South African Fuels Forum.
Although the forum is convened at a time when the world faces difficult economic headwinds, it provides a valuable opportunity for all stakeholders to engage in comprehensive discussions on key industry concerns, spanning fuel security, pricing, infrastructure investment, and the dynamic regulatory environment.
As stated, when we tabled the department’s budget, the world’s economic challenges have been compounded by intensifying global trade tensions, shifting geopolitical relationships, and most recently, the United States of America’s (USA) imposition of trade tariffs on multiple countries. It is undeniable that these tariffs will have a profoundly negative impact on many economies, particularly those of developing nations such as ours.
Albert Einstein’s assertion that “in the midst of every crisis, lies great opportunity” resonates here, as we are afforded a greater opportunity to recalibrate and devise strategies that will place our economy on a growth trajectory.
I am, therefore, satisfied that the discussions at this year’s South African Fuels Forum, which I am pleased to be a part of, will provide a comprehensive overview of the industry’s challenges while also exploring opportunities and potential solutions to effectively address these challenges.
In its contribution, the newly reconfigured Department of Mineral and Petroleum Resources (DMPR) has anchored its strategy to foster and advance both the mineral and petroleum sectors in five key areas.
The first and second priority areas are inextricably linked, aiming to promote investment and accelerate transformation in mining and petroleum sectors by fostering an enabling policy and regulatory framework as well as implementing policies to facilitate greater participation of historically disadvantaged individuals.
In October 2024, we published the draft Petroleum Products Bill (PPB) for public input. Through this bill, we sought to review and update the existing Petroleum Products Act (PPA) by addressing stakeholder concerns that have arisen over the years.
The bill seeks to institute efficient, cost-effective, broadly representative and competitive manufacturing, wholesaling and retailing of petroleum products in South Africa. Moreover, the bill aims to promote transformation and adherence to good industry practices within the South African petroleum products and liquid fuels sector.
As previously indicated, the department has consolidated stakeholder inputs to the bill and is preparing to submit the bill to Cabinet for approval prior to tabling in Parliament before the financial year-end. We are convinced that once the amendments to the Petroleum Products Act are made and enacted into law, this will not only drive transformation but also guarantee regulatory certainty in the industry.
This is an addition to the seminal Upstream Petroleum Resources Development Act (UPRDA) of 2024, a legislative milestone in South African history. The enactment of the UPRDA is a culmination of the work initiated during the 6th administration aimed at separating petroleum issues from mining, thereby granting the petroleum sector autonomy from other industries. This, in turn, has paved the way for an orderly and ecologically sustainable development of the country’s petroleum resources. By the end of September this year, we will issue the regulations to provide the mechanisms for the implementation of the Act.
Efforts and interventions are being streamlined to support value addition close to the point of production. At the heart of these initiatives lies the assurance of a secure liquid fuel supply to meet the country’s growing demand, with safeguarding local refining capacity being of utmost importance.
It is essential to acknowledge that the world’s energy demand growth is still largely being met by fossil fuels, with petroleum being the primary source. The shutdown of refineries has resulted in significant disruptions to the supply chain. Chevron, BP, Shell and most recently TotalEnergies have all exited the refining business in South Africa. Petronas has also divested its refining and downstream interests in South Africa. As you may be aware, Shell is now finalising its divestment from the downstream sector in South Africa. Currently, Engen and Astron are now owned by international commodity traders, specifically Vitol and Glencore.
Our country’s competitiveness hinges on evolving from a consumer of finished products to an active refiner of petroleum products. Security of supply relies heavily on diversifying supply sources, which South Africa is maintaining to a large extent. Moreover, achieving security of supply necessitates a robust and efficient supply chain that can adapt to changes in demand fluctuations and respond to emergencies.
In this context, we have established the South African National Petroleum Company (SANPC) as a Southern African petroleum champion, tasked with overseeing strategic planning, coordination, and governance of the country’s petroleum resources. The entity is expected to play a pivotal role in ensuring sufficient access to refined petroleum products, thereby fulfilling its mandate of providing security of liquid fuel supply to South Africa. We have set strategic goal to operationalise the PetroSA’s gas-to-liquids (GTL) refinery and the South African Petroleum Refinery (SAPREF) within 5 years, which necessitates cooperation among industry stakeholders to ensure the security of liquid fuel supply.
Ensuring environmental sustainability by enhancing environmental compliance and enforcement is the department’s third priority area. Although South Africa has experienced significant investments in petroleum exploration in recent years, the primary challenge to these investments persists in the form of lobby groups and foreign-funded non-governmental organisations (NGOs) that continue to block the development of oil and gas, purportedly in the interest of environmental conservation.
The fact remains that ecology and economy can coexist. It is not a question of ecology versus economy or economy versus ecology, but rather about ensuring sustainable development that balances the socioeconomic needs of the nation.
In this context, the environmental authorisation for Shell to drill up to five deep-water appraisal wells off the west coast is a welcome development. Several majors, including TotalEnergies, are also planning to explore off the west coast, where significant discoveries have been made in the Namibian Orange Basin, with potential extensions into South Africa’s waters.
The publication of the biofuels strategy has triggered a surge in investment projects in the biofuels sector. Local biofuels manufacturing will confer benefits on the balance of payments and bolster fuel supply security, albeit to a limited extent. We expect the creation of jobs in feedstock production. As you are aware, the department has recently published a draft regulation for comment, which will provide certainty regarding biofuels pricing. We are cognisant that many of you are waiting for blending pricing framework, which must be concluded within the current financial year.
The fourth and fifth priority areas of the department are about promoting regional integration and cooperation by leveraging the bilateral and multilateral platforms, as well as strengthening institutional capacity and governance by enhancing organisational efficiencies to modernise and bring about responsiveness.
As stated during the department’s budget vote tabling, we have achieved notable progress in strengthening our relations through various bilateral and multilateral agreements, particularly a strategic partnership with Côte d'Ivoire designed to secure a stable supply of petroleum products, such as jet fuel, and the SANPC’s successful negotiation of a 90% shareholding in the oil block B2 in South Sudan.
Our sustained commercial presence in Ghana is another accomplishment that underscores our strategic ties on the African continent.
Despite these developments, the fact remains that the refinery landscape in Southern African is underdeveloped compared to other regions globally, resulting in higher fuel costs for countries in the region and increased inflation. Although the regional market was previously integrated, it is now experiencing signs of disintegration, with countries seeking alternative solutions. The South African petroleum industry must acknowledge the risk of other regions continuing to capture market share from South Africa, posing a challenge to the long-term sustainability of local businesses.
The days of the petroleum sector playing second fiddle to other forms of energy are behind us. Through collaborative efforts, we can create a sector that meaningfully contributes to the country’s drive for inclusive economic growth, job creation, and poverty eradication.
In closing, I can assure you of our unwavering commitment to advancing the petroleum sector and securing its rightful place. Our senior officials attending this forum will provide further insights into the department’s initiatives that are aimed at fulfilling this important mandate.
I thank you.
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