The Department of Minerals and Energy's Hydrocarbons and Energy Planning Branch is responsible for coal, gas, liquid fuels, energy efficiency, renewable energy and energy planning, including the energy database.

The liquid fuels industry was licensed in 2005 for the first time. The objectives of the licensing framework as detailed in the Petroleum Products Amendment Act 2003, Act 58 of 2003, include:

• Promoting an efficient manufacturing, wholesaling and retailing petroleum industry;
• Facilitating an environment conducive to efficient and commercially justifiable investment;
• Promoting the advancement of historically disadvantaged individuals; and
• Creating employment opportunities and small businesses in the petroleum sector.

South Africa produced 23 571 million litres of liquid fuels product in 2005, according to SAPIA. About 36 percent of the demand is met by synthetic fuels (synfuels), which are produced locally, largely from coal and from natural gas. Products refined locally from imported crude oil meet the remaining 64%.

The petrol price in South Africa is linked to the price of crude oil in international markets and is quoted in US dollars (US$) per barrel. International petrol prices are essentially driven by supply and demand for product in a particular market. Crude oil prices combined with the Rand/Dollar exchange rate therefore have a major impact on petrol prices.

A crude-oil refinery’s biggest input cost is crude oil. In order for a refinery to make a profit, the price for the product manufactured from crude oil has to be higher than that of the crude oil price. When crude oil prices increase – as they have over the past months – the petrol price has to increase so that crude oil refineries are able to cover their own costs.

Petro SA

PetroSA, or the National Petroleum, Gas and Oil Corporation of South Africa, is the country's national oil company. It owns, operates and manages the South African government's commercial assets in the petroleum industry. The company was registered in January 2002 as a commercial, non-listed entity under South African law.

PetroSA is engaged in two worldwide businesses: oil and gas exploration and production; and the production and marketing of synthetic fuels and petrochemicals. The company explores for oil and gas in selected basins around the world, with a focus on Africa, and has producing fields off the coast of South Africa. It has marketing operations in the United States, Europe and the Far East that supply petrochemicals to customers in more than 40 countries.

PetroSA is a pioneer in the field of gas to liquids (GTL) technology, recognised around the world for producing the cleanest fuels through an environmentally responsible process that releases minimal emissions. The company is responsible for producing and marketing synthetic fuels produced from offshore gas produced at its Mossel Bay refinery in the Western Cape, which is the world’s largest commercial gas to liquids plant.

PetroSA’s gas-to-liquid plant supplies about 7 percent of South Africa’s liquid-fuel needs. The products are supplied to oil companies that market them under their own brand names. PetroSA also produces anhydrous alcohols and speciality fuels that are exported and earn the company more than R500-million a year. PetroSA’s oilfield, Sable, situated about 150km south off the coast of Mossel Bay, is expected to produce 17 percent of South Africa’s oil needs.

See the PetroSA website for more information.

Sasol

Sasol is an integrated oil gas company with substantial chemical interests. In South Africa, these operations are supported by mining coal and converting it into synthetic fuels and chemicals through proprietary Fischer-Tropsch technology.

The company also has chemical manufacturing and marketing operations in Europe, Asia and the Americas. Its larger chemical portfolios include polymers, solvents, olefins and surfactants and their intermediates, waxes, phenolics and nitrogenous products.

The group explores for and produces crude oil in offshore Gabon, refines crude oil into liquid fuels in South Africa, and retails liquid fuels and lubricants through a growing network of Sasol Convenience Centres.

Sasol also supplies Mozambique natural gas to customers and to its petrochemical plants in South Africa. The company recently opened its first gas-to-liquids facility outside of South Africa at Doha in Qatar and is in talks with China regarding the possible establishment of coal-to-liquid plants in China.

Sasol's focus is on the manufacturing, refining and marketing of automotive and industrial fuels and oils, with a growing interest in gas. Its entry into hydrogen- and methane-rich gas production and exploration has extended into southern and West Africa.

In industry, Sasol provides premium fuels and lubricants that meet or exceed stringent specifications. It also produces jet fuel, fuel alcohol and illuminating kerosene.

Sasol is a signatory of Responsible Care, a worldwide initiative that strives to improve performance in safety, health and the environment.

See the Sasol website for more information.

Central Energy Fund

The CEF is involved in the search for appropriate energy solutions to meet the future energy needs of South Africa, the Southern African Development Community and the sub-Saharan African region. This includes oil, gas, electrical power, solar energy, low-smoke fuels, biomass, wind and renewable energy sources. The CEF also manages the operation and development of the oil and gas assets and operations of the South African government.

The CEF, through its integrated oil company subsidiary, PetroSA, is involved in the exploration for oil and gas onshore and offshore in South Africa and the rest of Africa. It is also involved in the production of environmentally friendly petroleum fuels and petrochemical products from gas and condensate at its synfuels refinery outside Mossel Bay and the management of oil-storage facilities.

The Strategic Fuel Fund manages South Africa's strategic crude oil reserves.

Oil Pollution Control SA, a CEF subsidiary company, provides oil prevention, control and clean-up services, mainly in South African ports and coastal areas, in terms of South Africa's National Environmental Management Act 1998, Act 107 of 1998.

Through its subsidiary, the Petroleum Agency of South Africa (PASA), the CEF manages the promotion and licensing of oil and gas exploration, development and production in South Africa and the coastal areas offshore, as part of creating a viable upstream oil industry in the country.

CEF subsidiary iGas acts as the official agent of the government for the development of the hydrocarbon gas industry, comprising liquefied natural gas and LPG in South Africa.

Indigenous oil and gas resources

The Department of Minerals and Energy is committed to the promotion of liquid petroleum gas (LPG), which is cleaner and safer and can serve as an efficient burning energy source. It is better-burning fuel for cooking and heating and does not generate smoke, dust and choking fumes like most other hydrocarbon fuels.

The government is committed to making liquid petroleum gas more affordable for cooking and heating to reduce the need for large investments in power generation. The LPG Association undertook to connect 250 000 low-income households by March 2005 and a further 3-million by 2008. However, only 23 000 households were connected by March 2005. The department is addressing the problems of this project. For example, among the obstacles encountered was the price of LPG and the cost of cylinders. Once these become affordable, a large market will open up. Eskom is also supporting the initiative.

PASA

PASA, or the South African Agency for Promotion of Petroleum Exploration and Exploitation, has been successful in encouraging international exploration companies to evaluate the country's oil and gas opportunities.

The FA-EM gas-field complex off Mossel Bay started production in the third quarter of 2000. Initial reserves have indicated that it will provide sufficient feedstock to the Mossel Bay Refinery til 2009. The GTL production level at the refinery is currently 31 150 barrels of petroleum products per day.

Parallel exploration is being carried out in various other sections of the Bredasdorp Basin off the coast of Mossel Bay to locate reserves for PetroSA beyond 2009.

The field, which came into operation in August 2003, was initially projected to produce 30 000 to 40 000 barrels (bbls) of crude oil a day and 20-million to 25-million bbls over the next three years. The net savings in foreign exchange to South Africa would be equivalent to PetroSA's bottom-line profit, depending on the crude oil price.

PetroSA holds 60 percent working interest in Sable, while Dallas-based partner company Pioneer Natural Resources holds the remaining 40 percent.

Importing and exporting

The import of refined products is restricted to special cases where local producers cannot meet demand. It is subject to state control to promote local refinery utilisation.

When overproduction occurs, export permits are required and generally granted, provided that both South Africa's and other Southern African Customs Union members' requirements are met. More diesel than petrol is exported, owing to the balance of supply and demand of petrol and diesel relative to refinery configurations.

Although petrol and diesel make up 55 percent of total liquid-fuel exports, South Africa is also the main supplier of all other liquid fuels to Botswana, Namibia, Lesotho and Swaziland.

Source: South Africa Yearbook 2005/2006

To read the guidelines governing the recommendations by the Department of Minerals and Energy to the International Trade Commission in respect of the importation and exportation of crude oil, petroleum products and blending components, click here.

World Petroleum Congress

The 18th World Petroleum Congress (WPC) was held in Johannesburg from 25 to 29 September 2005. For the first time in its 72-year history, the WPC was held on the African continent.

The conference gave Africa countries the opportunity to highlight the continent's growing influence in the international oil market arena. The Congress called on oil-rich African countries to ensure their resources benefited African people.

Other issues discussed were:

• Possible solutions to the alleviation of Africa's poverty through sustainable economic growth;
• Oil prices, climate change and the impact of HIV/AIDS within the industry;·and
• The possible inclusion of alternative energy supply into the existing energy mix.

The 19th World Petroleum Congress will be held in Madrid in 2008.

Visit the World Petroleum Council to download the daily newsletters for the 18th World Petroleum Congress.