The South African government has reiterated its stance that South African needs a mega oil refinery despite “fundamental changes” under way globally, including the transition to electric mobility.

In addition, it has expressed an eagerness to pursue the development in partnership with a regional oil company at the mothballed Sapref refinery site, which bp and Shell sold to the State-owned Central Energy Fund for R1 in 2024, having shut the refinery in 2022.

Flanked by Mineral and Petroleum Resources Minister Gwede Mantashe, deputy director-general Tseliso Maqubela told the Portfolio Committee on Mineral and Petroleum Resources that the security of the country’s fuel supply had become vulnerable because of the recent closure of domestic refineries.

He pointed to a significant rise the number of fuel tankers delivering product through the Port of Durban as an indication of the country’s prevailing import dependence, which was being mitigated in the short term through ensuring diverse supply sources and an increase in storage.

However, there was still insufficient inland storage, while the vulnerability of supply was highlighted recently by a fire at the Natref refinery, which left the OR Tambo International Airport in a precarious supply position.

Maqubela indicated that additional storage and the development of fuel terminals at Island View in Durban and at the Port of Ngqura would be important for boosting supply security in the short term.

However, he argued that a new mega refinery with a daily capacity of more than 400 000 bbl was also still required.

This, despite warnings of a stranded-asset risk, in light of the significant refining capacity that had been developed in the Middle East and Asia in recent years and the uncertainty posed by the energy transition.

“We need to build a refinery, whether it’s at Sapref or elsewhere,” he said, with government having previously proposed that a refinery be developed at Coega, in the Eastern Cape.

“[And] we can’t have a Sapref that comes back at 180 000 bbl/day. Sapref must come back at 400 000 bbl/day or more,” he averred.

In addition, Maqubela indicated that government was aiming to pursue the investment with a national oil company from within the region.

“What would give us comfort is if . . . Sonangol [of Angola] can be part of rebuilding Sapref, or Botswana Oil,” he added.

In his presentation, Maqubela indicated that Angola had already emerged as a significant supplier of crude to South Africa.

Lawmakers were also informed that work was under way on a Petroleum Sector Masterplan, which would be completed in the coming financial year.