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Plan to ensure fuel supply

by BuaNews Online
on 19 Oct 2010
BuaNews Online
BuaNews Online

The Department of Energy has released Draft Regulations in a bid to ensure security of fuel supply in the event of unexpected major disasters.

The department has released for public comment Draft Regulations regarding Strategic Stocks to be held by oil companies. This is part of a broader review of Government's Strategic Stocks Policy.

"South Africa already has about 10.3 million barrels, which is equivalent to 20 days stock of crude oil that is currently stored in Saldanah.

"It is, however, joining the rest of the world in developing policy that makes provision for strategic stocks of finished products to be held by oil companies to cater for catastrophes and emergencies," the department said.

The department also pointed out that the country does not have to store only crude oil, but also needed to store finished products in facilities that are located closer to the markets or points of need.

The regulations come directly from the department's endeavors, which were given impetus by the Moerane Investigation's recommendations.

The investigation established that there were serious limitations in the movement of petroleum products from the coast to the inland and that there is no legal obligation on oil companies to hold prudent commercial stocks.

The investigation showed that the strategic stocks held by government are only in crude oil.
The Moerane Investigation recommended that the strategic stocks held by government should include refined products and that oil companies should be legally mandated to keep a certain level of finished products as strategic stocks.

"The initial recommendations of the department's study on strategic stocks, called Task 135, were that the oil industry should keep 28 days of finished products as strategic stocks, while government would keep 18 days of finished products and 42 days of crude as strategic stocks," the department said.

However, after carefully considered the existing realities and the recent change in the economic outlook, the department has revised the mandatory stockholding by oil companies to 14 days.

"This effectively means that ultimately, government would still keep the larger portion of refined products as strategic stocks and therefore we would reasonably expect the oil industry as a responsible corporate citizen to contribute to the security of supply of liquid fuels for the country," the department explained. - BuaNews

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