South Africa is one deal away from having its own crude oil, claims DMRE deputy director-general

SOUTH Africa is one deal away from having its own crude oil to refine and serve the local market from the Orange Basin crude oil reserves find shared with Namibia, more than half of which fall on the local side, taking the country a step further towards energy independence.

This is what the Department of Mineral and Petroleum Resources (DMRE) deputy director-general Tseliso Maqubela told Parliament on Tuesday.

“Basically, the vast majority of that oil found in Namibia in that basin is on our side of the border. It is now a question of ensuring that companies are allowed to explore,” Maqubela said, briefing the Portfolio Committee on Minerals and Petroleum Resources.

“We allow them to produce, we don't stand in their way. We make it attractive to produce and revenues will flow, but it is first to must ensure they are able to do the work.

“We are a deal away from producing oil, we just do not need to be tentative but decisive and intentional. All of society needs to be behind this, it will change the fortunes of our country. Life in the Northern Cape will change overnight.”

Maqubela pointed out the socio-economic impact of the country not having sufficient refinery capacity.

He said there were discussions for the establishment of a Petroleum Engineering School in the Northern Cape as there were high prospects that something will be found there sooner or later.

Maqubela also said other prospects were in the Coal Bed find in Limpopo that would produce methane gas and has become a race now with Botswana and Zimbabwe on who would produce from it first, though South Africa has the competitive edge.

The department is currently working on a comprehensive Master Plan for the petroleum sector, projected to delineate a 25 to 40-year roadmap.

As Maqubela explained, the urgent need for this plan was underscored by rising challenges within the industry, including fuel adulteration and a lack of refinery capabilities

“We are seeing a phenomenon where people are importing paraffin from Zimbabwe, which does not have the tracer dye, and is then mixed diesel in Limpopo and sold to unsuspecting retailers and motorists,” he said.

“There are now a lot of off specifications fuel imports. We are now an importing country, this is a consequence of a closure of a refinery, anyone can supply you but find the fuel is off specifications.”

Concerns surrounding the burgeoning non-compliance culture in the fuel market have also been raised.

Maqubela lamented the oversubscription in the fuel wholesale sector, noting that while the department had reached a regulatory limit of 6,000 wholesalers, it could not issue a moratorium on new licenses due to statutory constraints.

This has created a competitive struggle among wholesalers for minimal market share, adding administrative burdens to fuel companies striving to remain compliant.

The DMRE is taking action to address these challenges, with initiatives such as engaging a company to routinely sample fuel for compliance and issuing notices of intention to cancel licences for non-compliant service stations.

“All of a sudden compliance levels are increasing, revenue is being paid, and the number of repeat offenders has gone down,” Maqubela reported, as the department intensifies efforts to restore integrity and stability to the fuel wholesale market.

– BUSINESS REPORT