Mineral and Petroleum Resources Minister Gwede Mantashe has indicated that he wants the newly launched South African National Petroleum Company (SANPC) to play a central role in reviving domestic refining activity, which has shrunk dramatically in recent years as refineries have ceased operating.

The new State-owned enterprise has been formed through the merger of three Central Energy Fund (CEF) subsidiaries, namely iGas, the Strategic Fuel Fund (SFF), and PetroSA.

Although the so-called legacy and mostly financially distressed components of PetroSA will be integrated into SANPC in phases, at what speed will depend on turnaround progress.

A ‘legacy’ PetroSA board and executive team remains in place to oversee the turnaround, including a mooted resumption of refining activity at the gas-to-liquids (GTL) refinery at Mossel Bay, in the Western Cape.

Operations at the GTL plant were suspended after it was unable to secure new sources of natural gas, following the well-publicised failure of a multibillion-rand exploration and development initiative known as Project Ikhwezi, which left the entity close to financial ruin.

As of May 1, a total of 388 employees have been transferred directly to SANPC from the three entities, along with assets such as the Rompco pipeline from Mozambique to South Africa, previously held by iGas, the Saldanha trading and storage facilities and associated infrastructure, previously owned by the SFF, and PetroSA’s upstream asset in Ghana.

Speaking at the official launch ceremony in Sandton, Mantashe again lamented the decline of domestic refining, which is currently undertaken only at the Astron refinery, in the Western Cape, and the Natref refinery, in the Free State, while Sasol continues to produce fuels using its coal-to-liquids process at Secunda, in Mpumalanga.

“We cannot be complacent with a situation where local refining capacity accounted for about 80% of finished product consumed in 2010, compared to less than 35% in 2022,” Mantashe said.

“It is against this background that we fully support the SANPC in its concerted efforts to reinstate the PetroSA’s GTL refinery in Mossel Bay and to rebuild the erstwhile South African Petroleum Refinery (Sapref) in Durban,” he added.

Sapref, which ceased operations in 2022, had a nameplate capacity of 180 000 bbl/d, and was considered too small to remain competitive and also required significant investment to meet cleaner-fuel specifications.

The refinery was previously owned jointly by Shell and BP, but was sold to the CEF in May 2024 for about R1.

“The revitalisation of these assets underscore South Africa’s investment and growth strategy in the energy value chain geared to lay a solid foundation to address the challenges that lie ahead in the security of South Africa’s energy future,” the Minister said.

SANPC CEO Godfrey Moagi endorsed the Minister’s view that the new entity should play a role in refining, but also indicated that there was an intention to reinstate some of the tanking assets at Sapref more immediately to begin playing a role in the importation of petroleum products.

Chairperson Sipho Mkhize added that it planned to reach out to the authorities to seek permission to convert the single buoy mooring infrastructure, in Durban, which was established historically to facilitate the importation of crude oil, into a facility that could handle multiple products.

The new entity would also seek to play a larger role in the Western Cape liquid petroleum gas market and was assessing, together with PetroSA, two possible feedstock supply options to facilitate the resumption of refining activities in Mossel Bay.

It was also aiming to play a role in the development of liquefied natural gas import infrastructure, including at Coega in the Eastern Cape.

No details were provided about the financial position of SANPC, nor was any indication given as to how it planned to fund its growth plans.

However, emphasis was given to partnerships with the private sector, with Mantashe stating that, “for the entity to generate revenue for self-sustainability and sufficiency, it must take advantage of strategic partnerships”.

He also directed the leadership to focus primarily on oil and gas, stating any entry into renewables should be considered only much “later”.