The first organized search for petroleum fuels and hydrocarbons in South Africa occurred in the 1940s. It would be about 20 years after this geological survey that Soekor Ltd would be formed by the government to search for onshore crude oil reserves in Algoa, Karoo, and Zululand Basins.
In 1967, the government passed a new version of the Mining Rights Act. This provide a number of concessions to international agencies who were looking to establish the South African petroleum industry for the first time. The first offshore was drilled in 1969.
In the 1970s, the international companies began to withdraw from the industry due to political sanctions being placed on South Africa. Through the 1980s, Soekor became the only explorer of crude oil and petroleum resources as the world recoiled from apartheid policies.
A licensing round was held in 1994 when international investors began to return to the country. In 1999 and 2001, new oil companies were established to further the efforts of the industry. Today, there are now more than 300 exploration wells in place and over 230,000 kilometers of two-dimensional seismic data being evaluated to seek out new discoveries that may one day benefit the petroleum industry in South Africa.
Important South African Petroleum Industry Statistics
#1. The transport system of South Africa is almost wholly dependent on the petroleum industry for its energy needs, with 98% of its energy needs consumed from liquid petroleum fuels. More than 80% of fuel consumption is made of up petrol (gasoline) and diesel in 2016. (RSA Department of Energy)
#2. In 2016, the economy of South Africa grew at just 0.5%, pushed forward by the demand for natural gas within the petroleum industry. Natural gas saw growth of 6.86% in South Africa. (RSA Department of Energy)
#3. Crude oil imports made by the South African petroleum industry were mostly confined to OPEC countries. Saudi Arabia provided over 38% of imports, followed by Nigeria (29%), Angola (19%), and Qatar (3.3%). (RSA Department of Energy)
#4. Over 60% of the petroleum products which are offered by the South African petroleum industry are locally refined. About 36% of the demand is met by CTL (coal-to-liquid) synthetic fuels, domestic crude oil, and gas-to-liquid (GTL) synthetics. (RSA Department of Energy)
#5. Total refining capacity within the petroleum industry of South Africa stands at 703,000 barrels per day. 72% of the refining capacity is directly associated with crude oil refining, with the remainder involving GTL or CTL. (South African Petroleum Industry Association [SAIPA])
#6. Since 2012, gasoline production has increased after experiencing a 5-year decline due to a removal of leaded fuel from the industry. Total production in 2016 reached 11.5 billion liters. (RSA Department of Energy)
#7. Demand has averaged more than the domestic supply since 2007 in South Africa. In 2007, 12 billion liters of gasoline were consumed by South Africans domestically. In 2016, that figure was 11.7 billion liters. (RSA Department of Energy)
#8. To meet domestic demand levels, South Africa imported 1.4 billion liters of gasoline in 2016. In 2011, imports peaked at 2.4 billion liters. (RSA Department of Energy)
#9. Diesel production in South Africa has grown at an annualized rate of 1% since 2007 in South Africa, going from 8.6 billion liters in 2007 to 9.8 billion liters in 2016. (RSA Department of Energy)
#10. Diesel consumption rates grew at an annual average rate of 3% from 2007-2016, though it declined by more than 10% in 2016 from the year before. (RSA Department of Energy)
#11. About 70% of the gasoline and diesel fuel produced by the South African petroleum industry was consumed by the transportation sector. (RSA Department of Energy)
#12. 43% of the retail price for fuels produced by the petroleum industry in South Africa is determined by the Basic Fuel Price, or BFP. It is calculated by taking into account the movement of petroleum product prices globally and the exchange rate between the Rand and the U.S. Dollar. (RSA Department of Energy)
#13. Around 4,600 retailers are currently providing support for the South African petroleum industry across the country right now. (SAIPA)
#14. The market share for gasoline has declined from almost 76% of the market in 2007 to 69.3% of the market in 2016 when only retail sales are taken into consideration. In 2016, sales dropped by over 18% from the year before. (RSA Department of Energy)
#15. Gauteng consumes the most fuel in South Africa as a province, responsible for 36% of the market. The Western Cape and KwaZulu-Natal are both responsible for about 16% of the market respectively. All other provinces consume fewer than 1 billion liters of gasoline each year. (RSA Department of Energy)
#16. Sub-Sahara Africa’s share of global oil production currently stands at 6.5%, with proven oil reserves making up just 4.26% of the global share. The share of gas production and reserves on a global level is about 3%. (South African Oil and Gas Alliance [SAOGA])
#17. Total production levels by the South African petroleum industry stand at 191,000 barrels per day. That number gives the industry 0.22% of the total share of global oil production, ranking South Africa as the 43rd largest producer. (SAOGA)
#18. About 15 million barrels are currently known in proven reserves for the industry, which represents 0.001% of the total known global reserves. (SAOGA)
South African Petroleum Industry Trends and Analysis
The South African petroleum industry is still in its beginning stages, even though the history of the industry dates to the 1940s. For the first 20 years of the industry, almost zero development took place, except for light exploratory efforts. Then, after less than a decade of international development, another period of almost 20 years with virtually no development took place because of government policies.
Now we are in the first 25 years of authentic industry development. South Africa is not producing enough petroleum resources to meet domestic demands, much less be able to produce crude oil products that would make an impact on the global market.
Although the refinement capacity continues to increase, the products are primarily intended for domestic consumption.
The industry is also still transitioning from changes in 2006 which altered the landscape of the retail and refinement markets. From 2012-2015, the first glimpses of growth began to be seen from these gasoline and diesel specifications, following the phasing out of lead, introducing benzene, and reducing sulphur. Then the market crashed in 2016.
There are challenges to face within the South African petroleum industry that may limit outputs and revenues through 2030. At the same time, there are great rewards to be found if new reserves are discovered, refinement capacities are improved, and retail pricing stabilizes.