South Africa faces crude oil supply crisis as Sasol’s refinery warns of possible closure

South Africa is facing a mounting crude oil supply crisis, with serious implications for its energy security. At the heart of the issue is the financial strain on the Natref refinery in Sasolburg - the country’s only inland crude refinery - which has warned of possible closure owing to surging operational costs, Independent Online (IOL) reported on May 26.

The crisis is largely attributed to the shutdown of Durban's local refineries, which has reduced the use of the single buoy mooring (SBM) by 80% in the Indian Ocean offshore Durban, increasing the cost of transporting crude oil inland.

Sipho Mkhize, chairman of the South African National Petroleum Corporation (SANPC), stated: “These financial strains could force the refinery to close, making South Africa dependent on imports to grow to 85% of its petroleum needs and increasing vulnerability and security of supply risks.”

SANPC is the newly established state-owned enterprise (SOE) formed after the merger of three of the Central Energy Fund (CEF) subsidiaries, Igas, PetroSA and Strategic Fuel Fund (SFF). South Africa already imports about 75% of its fuel, and further dependence on imported crude could pose serious risks to the country’s energy stability.

To address the looming supply crisis, SANPC plans to convert the SBM into a multi-buoy mooring (MBM) system to improve flexibility in handling bulk liquids and alleviate throughput bottlenecks at Natref. SANPC is also seeking leases for sites from the Transnet National Port Authority (TNPA) to strengthen operations. Mkhize underscored the strategic role of SANPC, saying, “SANPC is not just another company. It is a national asset. It is the embodiment of the government’s vision for a modernised, integrated, and impactful energy sector player.”

He also stressed the need for a state-owned independent terminal operator to ensure fair access to port infrastructure and reduce reliance on international oil companies (IOCs), which currently influence logistics. A key initiative is SANPC’s acquisition of the dormant Sapref refinery in Durban. If revitalised, it could significantly boost domestic fuel production or serve as a base for a future mega refinery capable of processing 450,000 to 600,000 barrels per day (bpd).

Minister of Mineral and Petroleum Resources Gwede Mantashe highlighted the urgency of rebuilding local refining capacity, noting that in 2022, local output made up less than 35% of fuel demand, down from 80% in 2010. According to the minister, the SANPC, now integrating 400 employees and critical infrastructure assets, aims to stabilise supply and shift towards cleaner energy, positioning itself as a key force in South Africa’s energy future.