The infrastructure for the refining and transporting of petroleum products has to be expanded in order to ensure that the demand can be satisfied, the South African Petroleum Industry Association (Sapia) said in its latest annual report.
It said that the demand for petroleum products in South Africa has grown by 12% in the past four years and is likely to grow more as the government’s plans to accelerate economic growth bear fruit.
Demand in the inland areas has grown even faster than the coastal areas.
“This means that the infrastructure for the refining and transporting of these products has to be expanded in order to ensure that demand for petroleum products can be satisfied. Recent events have demonstrated that the supply infrastructure is currently stressed,” Sapia chairperson advocate Rams Ramashia said.
In addition, the production of cleaner fuels has effectively reduced refining capacity, he said.
“The industry has sought an incentive to assist in the financing of the investments required to produce the cleaner fuels, but has so far been unsuccessful in this endeavour,” he added.
While it is desirable — given the worldwide growth in the demand for petroleum products and the resultant tight global refining capacity situation — that South Africa should have adequate domestic refining capacity, this is not as critical as adequate capacity to transport the products to the markets in South Africa.
“This is because it possible — at a price — to buy refined products on world markets, but if the infrastructure to move the products from the coast to the industrial heartland is inadequate, then demand simply cannot be met,” Ramashia continued.
“Clearly, any shortfall in supply of petroleum products will have an inhibiting effect on the country’s economic growth rate. It is vital that everything possible is done to encourage the necessary investment in infrastructure.
“Sapia calls on all the stakeholders to work together in ensuring that the necessary planning takes place,” he added.
Close cooperation between the industry and rail utility Transnet — which operates the country’s vital pipeline and rail networks as well as its ports — will be a key feature of a plan to ensure that growing demand is met.
“Sapia therefore welcomes the plans to increase the capacity of the pipeline network and the plans to restore the efficiency of Spoornet. Keeping pace with, and proactively promoting, the dynamic growth that South Africa is enjoying is a challenge that must be met,” Ramashia said. — I-Net Bridge