South Africa grants long-term lease extensions to oil majors, energy traders at Durban’s strategic fuel hub

South Africa has granted long-term lease extensions to international oil majors and trading houses, including BP and Vitol, at the Island View Precinct, the country’s most important fuel import and storage hub in Durban.

According to the Fuels Industry Association of South Africa (FIASA), the decision ends years of uncertainty over short-term lease arrangements that had raised concerns about investment security and the reliability of fuel supply, Reuters reported on September 16.

Transport Minister Barbara Creecy authorised the extensions at the Island View Precinct following a request from the FIASA, formerly the South African Petroleum Industry Association (SAPIA).

The import and storage hub is a critical petrochemical zone within Durban port that handles roughly 70% of South Africa’s fuel imports. According to the media agency, Creecy invoked Section 79 of the National Ports Authority Act, which allowed to bypass normal procedures in the national interest.

“The Section 79 letter was issued to our members … It is in our favour. Remember, we wanted a long-term tenure, so we got that,” FIASA chief executive Avhapfani Tshifularo, said as cited by Reuters. “For my members, I know that there are 25-year lease negotiations that are going to commence with Transnet National Ports Authority (TNPA),” he added.

BP noted that the approval was granted to Sapref, its joint venture with Shell. Since the shutdown of their Durban refinery in 2022, Sapref has concentrated on fuel imports via Island View, while the refinery itself was later sold to South Africa’s state-owned Central Energy Fund (CEF).

South African petroleum company and fuel distributor Engen, in which Vitol holds a majority stake, confirmed that it had also received approval, but did not disclose its conditions, Reuters said.

The CEF, which has separately applied for Section 79 relief, did not provide a response to the news agency’s questions on how the minister’s ruling might affect its ambitions to restart the flood-damaged Sapref refinery or expand its oil trading operations under the South African National Petroleum Company (SANPC), a CEF subsidiary. Officials at the transport ministry and TNPA indicated that more detailed announcements will be made in due course.

Securing long-term leases at the Island View Precinct is strategically important because the hub serves as the backbone of South Africa’s liquid fuels supply chain. With around two-thirds of the country’s imports passing through its terminals, stability at the import and storage hub is essential to avoid disruptions in transport, industrial output and electricity generation.

For South Africa, long-term leases with oil majors and energy traders reduce reliance on costly short-term import arrangements and strengthen energy security in the face of refinery closures, fluctuating global supply chains, and domestic demand growth.

Business Insider Africa writes that whilst the long-term lease deals at Durban’s Island View Precinct secure fuel supply stability, they deepen reliance on foreign oil majors. With local refineries closed, imports now dominate, giving BP, Shell and Vitol greater sway over the country’s energy chain — a trend mirrored across Africa, where weak refining capacity heightens exposure to global traders.