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Civil unrest in South Africa raises questions about the security of fuel supplies. What are the risks along the entire value chain – from supply to consumption? Without fuel to grow crops or bring food from farms to cities, hunger ensues.
Oil companies and governments are generally aware of the strategic role played by liquid fuels and have special measures to protect supply and logistics. Much of South Africa’s measures are apartheid-era hangovers that have eroded over time. Periodic risk assessments have been carried out, but many have assumed a calm society. It seems that insufficient attention has been paid to the risks imposed by a broken social pact.
So where are the biggest risks?
South Africa has always been heavily dependent on imported fuel. Its synthetic fuel capacity (from coal) – developed during the apartheid era to overcome oil sanctions imposed by the United Nations – accounts for the balance.
But the risk for imports seems low. The world is full of petroleum and refined products. This is due to the drop in demand triggered by the lockdowns to contain the spread of Covid-19. The risk of a global shortage appears low, outside of the usual refinery fires and supply disruptions.
The OPEC cartel is still trying to manipulate prices. At the same time, they don’t want to strangle demand. Moreover, its power has been tempered by a massive increase in output from unconventional producers, such as the hydraulic fracturing industry, in the United States. North America is today one of the largest oil producers in the world.
This leaves frontline security risks for the fuel supply in South Africa. Fears that the country might run out of fuel arose last week following a spike in looting and destruction of infrastructure. Most of the destruction has been concentrated in the country’s economic center, Gauteng and Kwa-Zulu Natal on the east coast and is home to one of Africa’s largest ports.
From the violence patterns of the past week, it appears that the threats to the fuel supply are land based. They come from the following types of groups:
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politically motivated insurgents seeking to undermine the democratic project
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organized crime (mafias). The South African construction industry has been beset by local racketeering mafias armed with automatic weapons demanding money for “protection.”
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little thieves
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occasional looters, and
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weak or complicit police. The institutional weakening of law and order that took place during the period of “state capture” associated with President Jacob Zuma’s tenure may have been a contributing factor.
The attacks that have taken place appear to have been committed by one or more of these groups acting in concert – by design or by coincidence. The groups involved may depend on local conditions.
Who is, and who is not, does the damage
The fact that some groups managed to shut down the economic umbilical cord – the main road from South Africa’s largest port to Durban to its industrial heart, Gauteng – for days on end – reveals a certain organization and determination as well as the weakness of authorities.
Most of South Africa’s fuel is delivered by sea. Unlike countries like Somalia and Nigeria, South Africa’s national mafias have yet to expand into piracy.
Crude oil is delivered by very large ships to the only mooring buoy off Durban that is visible from the shore.
But no infamous group has yet shown marine leanings. In addition, crude oil has no immediate local value as it still needs to be refined. Mooring to a single buoy does not seem risky at the moment.
What about the risks for refineries?
The immediate threat to a refinery is a workforce that cannot get to and from work. The next threat is posed by ability. Refineries produce large volumes. If their downstream distribution network is clogged, they have to shut down for fear of drowning in their own product.
This is what prompted the decisions by Shell and BP to shut down their refinery in Durban last week.
South Africa also imports petroleum products, delivered by ship to the main ports of Durban, Richards Bay and Cape Town, where they are unloaded via loading facilities into nearby storage tanks in the port area.
Strong security is essential. The recent looting of containers in the port of Durban does not speak well of port security.
To steal this fuel, you need at least one big truck. It wouldn’t be easy to squeeze into a port, unless the security at the port’s gates was complicit. Most of this type of theft is more akin to fraud in paperwork, like bogus volumes, which the oil companies are constantly battling with.
From storage depots, fuel is loaded onto tank trucks for delivery to service stations and customers. This is where the fuel supply chain is most vulnerable. To replenish gas stations in and around Durban, private security services have been escorting convoys of tankers with unseen law enforcement authorities since the end of last week.
Tankers are easy, slow targets that often move around built-up areas.
Riots and insurgency in KwaZulu-Natal began with the burning of more than 20 trucks on Durban’s main road in the industrial heart of the sleepy town of Mooi River. Attacks on trucks have occurred repeatedly at this location for several years. It is inexplicable that law enforcement authorities seem to have done nothing about this.
This is such a glaring oversight that it raises questions about, at best, total ineptitude, or at worst, complicity.
Many people are familiar with the explosive qualities of fuel and while there are those who might try their luck, the theft of petroleum products is more the prerogative of the Mafias. This was evident in the theft of several million liters of a pipeline in Van Reenen – some 270 km from Durban – where several large tankers were arranged to transport the fuel.
The state-owned pipeline operator, Transnet Pipelines, has reported an “unprecedented increase” in pipeline theft incidents in recent years.
The point is, arson on fuel facilities literally sends money up in flames, which even criminals don’t like. Not so, the insurgents.
Inland, there are other storage depots in the supply chain. They are required by law to install certain protective measures. These seem to have worked or have not been on the radar of those looking to do damage.
From these depots, fuel is transported to service stations and retailed to motorists.
Because South African law prohibits motorists from refueling their vehicles, gas stations normally have multiple pump attendants and are well lit at night, making them relatively safe. In the current cycle of unrest, many gas station owners have closed their stores, making it difficult for thieves to gain access to underground storage tanks.
South Africa will need to reassess its risk profiles at every link in its land fuel supply chain. Currently, the most vulnerable appear to be refineries, road delivery and the Durban to Gauteng transport corridor – both by pipeline and by road.
Dr Rod Crompton is Adjunct Professor at the African Energy Leadership Center at Wits Business School, is a Board Member of the South African Association for Energy Economics and Non-Executive Director of Eskom and SANEA.
By Rod Crompton, Adjunct Professor African Energy Leadership Center Wits Business School, University of Witwatersrand
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