South Africa grants long-term leases to oil majors at key Durban fuel hub

South Africa

South Africa has granted oil majors and traders, including BP (BP.L), opens new tab  and Vitol, extended access at its main petrochemical hub, ending years of wrangling over short-term leases that threatened investment and supply security, the national fuels body said.

Transport Minister Barbara Creecy extended the lease agreements at the Island View Precinct at the request of the Fuels Industry Association of South Africa. The minister used Section 79 of the National Ports Authority Act, which allowed her to circumvent normal procedures in the national interest.

About 70% of South Africa’s fuel imports flow through Island View Precinct, which is part of Durban port on the east coast and acts as the country’s main storage and supply hub.

“The Section 79 letter was issued to our members … It is in our favour. Remember we wanted a long-term tenure, so we got that,” said Fani Tshifularo, chief executive of the Fuels Industry Association.

The Central Energy Fund did not respond to questions about its own, separate Section 79 application, or how the minister’s ruling could affect plans to revive the government’s flood-damaged Sapref refinery and boost its oil trading division, both led by the national oil company SANPC, a subsidiary of the Fund.

A BP spokesperson said approval was granted to Sapref Pty Ltd, an entity jointly owned with Shell and focused since 2022 on fuel imports at Island View marine terminal after it shut, opens new tab down their refinery business and subsequently sold, opens new tab the plant to state-owned Central Energy Fund.

Engen, where Vitol is a majority shareholder, said the minister had agreed with conditions, but didn’t elaborate.

“For my members, I know that there are 25-year lease negotiations that are going to commence with Transnet National Ports Authority (TNPA),” Tshifularo told Reuters.

A transport ministry spokesperson said details of the letter could not be shared and a statement would be issued in due course.

A Transnet official said the minister’s directive, issued on August 29, instructed them to conclude operator agreements for chemical and liquid bulk terminals at Island View by March 31 next year.

Dineo Mazibuko, the TNPA’s general manager for commercial services said discussions with terminal operators started on Monday.

“TNPA has mobilised all necessary resources to ensure that the deadline is met.”