Page 4 - DMEA Week 45 2022

DMEA COMMENTARY DMEA

(Image: SAOGA)
SAPIA head comments on offshore

opportunities, onshore supply gaps

Tshifularo correctly notes the need for policy change but fails to consider that reforms should also

encompass opportunities for new budget revenue streams as well as government access to production

HIGHER crude oil prices have put extra eco- (the Natref plant) has experienced multiple
nomic pressure on many sub-Saharan Afri- outages this year. As a result, the country has
WHAT: can countries this year, and South Africa is become far more dependent on imported petro-
The head of SAPIA says no exception. Indeed, it has been feeling extra leum products than it was previously.
South Africa’s offshore pressure because the price rises triggered by the The reliance on costly imports is a source of
oil reserves will not bring Russia-Ukraine war (and the Western sanctions frustration for many South African consumers
retail fuel prices down.
that followed its outbreak) hit at a time when its – not just the owners of generators, but drivers
own domestic energy system was already under as well. The government did attempt to assuage
WHY: considerable stress. that frustration by reducing the fuel levy, which
The country has been hit
hard by this year’s rise in Much of this extra stress arises from the accounts for almost 30% of domestic prices.
petroleum product prices. fact that the country’s electricity infrastruc- However, the cut was only a temporary measure.
ture is notoriously unreliable. With no fast It expired on August 2, and Pretoria has ruled
WHAT NEXT: work-arounds available, many business and out the idea of making permanent reductions.
The issue ought to be residential consumers are using generators to The government’s refusal to bring the fuel
addressed with more compensate for rolling blackouts. However, the levy down has led some observers to argue that
flexibility in the future. cost of the diesel and gasoline needed to keep the conditions were likely to improve with the devel-
generators running has risen considerably this opment of offshore oilfields. Proponents of this
year because of developments on world markets. view believe that South Africa’s offshore zone –
At the same time, South African consumers which may hold as much as 27bn barrels of oil,
have not been able to access domestic sources according to estimates made by the Petroleum
of fuel. Three of the country’s four oil refineries Agency of South Africa (PASA) – could become
(the Sapref, Engen and Cape Town plants) are a prime source of feedstock for refineries that
currently off-line, while the remaining facility can turn out fuel to supply the local market.

P4 www. NEWSBASE .com Week 45 10•November•2022