Professional Documents
Culture Documents
Muzi W. Mkhize
Chief Director: Hydrocarbons
Tel: 012 444 4015/6
Outline of Presentation
• Context
• Department of Energy’s role
• Strategic importance of the sector
• Legislative framework
• Collaboration
• Challenges
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The Role of the Department of Energy
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The Role of the Department of Energy (contd)
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Strategic importance of the sector
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Refining Capacity
TOTAL 708,000
* Barrels of oil equivalent per day
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Liquid Fuels Demand in South Africa
Bo tsw a n a
Durb a n – Ga ute ng
0.89
Co rrid o r ~ 68% o f
Na m ib ia RSA Ma rke t
0.95
In la n d No rth Sw a zila n d
12.7 0.26
In la n d So u th
2.1
Du rb a n
Le so th o Are a
0.19 5.3
All fig ure s in Billio n Litre s p e r a nnum
All Pro d uc ts – Pe tro l, Die se l, Ke ro ,
LPG, Fue l Oils
~ 30% of
Market
Supplied by
C a p e To w n Ea ste rn C a p e Are a Indigenous
Are a 2.4 Production
4.6
7
Geographical Location of South Africa
(Millions of Tons)
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Jigsaw Puzzle
Zonal Promotion of
Pricing Licensing
Competition
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Relevant Legislation
• Mineral and Petroleum Resources Development Act No. 28 of 2002
• Petroleum Products Act No 120 of 1977, as amended
Petroleum Products Amendment Act No. 58 of 2003
Petroleum Products Amendment Act No. 2 of 2005 (only technical changes)
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Some of published Government policy
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Historical Perspective
• Agreements that may not necessarily be legally enforceable
• Ratplan (Retail rationalisation plan)
Agreement between Government (DME), wholesale oil companies and the fuel retail industry
to limit the number of service stations
Not a legal instrument
Limitations of the Plan
Non-compliance
Concerns of the erstwhile Competitions Board
Termination of the Sasol-oil industry upliftment agreement (Blue Pump Agreement)
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The balancing act
Collaboration for
Competition
energy security
National Interest
13
Constrained Supply Chain
• Generally inefficient and unreliable rail system for petroleum products
Significant benefit can be derived from optimising block train operations
• For Chevron refinery in Cape Town, crude is discharged into the Saldanha
storage facilities and then piped by a dedicated pipeline into the crude oil
storage tanks of Chevref
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Constrained Supply Chain (contd)
• Overloaded logistics infrastructure for the transfer of petroleum products
from coastal to the inland regions
• Durban Port
Currently congested due to over-reliance by petroleum industry and the economy in general
Congestions cause major delays in berthing that result in increased demurrage costs
RSA market size is small by global standards and would tend to render duplication of infrastructure unviable, thereby requiring some form
of joint planning
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Collaboration Platforms
• Joint Initiatives, Studies or Projects
Government (mainly the DoE, DPE, the dti and DoT), State Owned Enterprises
and the petroleum industry players
E.g. FSSTT, Implementation of ESMP; development of a Regulatory Accounting
System
Development of alternative energy and promoting security of supply through
diversity (e.g. incorporation of biofuels)
New refining capacity development (Mthombo and Mafutha projects)
Storage and distribution (e.g. NMPP and associated storage facilities at the
depots; and consolidating rail tank cars (RTCs) into block trains)
Since infrastructure development lags the demand increase throughout the value chain means that the industry
needs more rigorous operational management than normal, requiring joint fora among all stakeholders
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Collaboration Platforms - contd
• Logistics Planning Team (LPT)
Convening during emergencies (as for Dec-05 shortages) to deal with urgent supply
matters
Meeting could even be held on a daily basis until the situation reverts to normal
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Challenges
In recognition of need for collaboration that is not anti-competitive, the CC has granted SAPIA an unconditional
exemption in terms of section 10(2)(a) of the Competition Act, 1998 (Act No. 89 of 1998), as amended, solely for
the purposes of the FIFA 2010 Soccer World Cup
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WE THANK YOU
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