BUSINESS MAVERICK
Sapref oil refinery declares force majeure, shuts down a third of South Africa’s fuel supply
On top of everything else, an economically destructive fuel shortage may be on the cards.
South Africa’s largest crude oil refinery, Sapref, said on Tuesday it was shutting down and declaring force majeure on contracts in the face of the ongoing social unrest partly triggered by the jailing of former president Jacob Zuma.
The Shell/BP joint venture made the announcement in a letter to clients.
“Sapref has been obliged to make the difficult decision to shut down the refinery.
“As a result of the aforegoing, Sapref hereby declares the occurrence of an event of force majeure, excusing Sapref from performing under the agreement,” the letter, dated 13 July, says.
“Due to the civil unrest in the country and disruption of supply routes in and out of Kwazulu-Natal, suppliers of materials critical to Sapref operations communicated the suspension of deliveries to the refinery due to safety concerns for their staff and damages to their vehicles on the roads.”
Sapref is South Africa’s largest refinery and accounts for 35% of the country’s refining capacity, according to its website.
The Engen refinery in Durban and the Chevron refinery are currently out of commission, leaving Natref, a joint venture operated by Sasol and Total, the only major source of refined fuel in the country.
The consequences in the pipeline for the wider economy are truly massive, with shortages of other goods and services that rely on the transport sector to get to market threatened. The damage of looting to South Africa’s economy, from the top enablers of State Capture to those on the streets today, is mounting. We are all poorer as a result. DM/BM
Can it get any worse? Petrol rationing? Bread rationing? Milk rationing? Oh, and beer rationing? S.A. can have the III World War all by itself.
We’ve had enough beer rationing to last a long time but we might have to fetch it from the brewery ourselves.
World War III: It’s Coming from Inside Your House edition
Force Majeure by Companies citing social unrest surely means an equivalent Government declaration of a state of emergency. This is the first who is next. Cyril who has threatened you with what?
Economically, this is probably the most consequential. How much fuel stock does Gauteng have before it has to start rationing fuel supplies? Is the Transnet fuel pipelines still operational? Does the Dept of Energy have plans to import refined fuel and/or increase production from other refineries to minimise the projected shortfall?
Indeed this is the thin edge of the wedge. No idea if there is any stock of fuel in GP or if the pipeline is operational but you can bet your bottom dollar that the only plans the Dept of Energy have is where to meet for lunch with some under-counter Blue Label. Our robotic leader speaks in an expressionless monotone while he watches the country burn. No plans, no action just wait and see…..
My understanding is that the only refineries producing liquid fuels are the Natref refinery in Sasolburg and Sasol. The other two are down for maintenance and Natref is a very small refinery.