Minister Gwede Mantashe: Official Launch of the South African National Petroleum Company

Programme director,

Director-general of the DMPR, Mr Jacob Mbele
Chairperson of the CEF Group, Ms Ayanda Noah
Chairpersons of CEF Group subsidiaries
CEO of the SANPC, Mr Godfrey Moagi
CEF Group CEOs and executives
Representatives from other state-owned entities
Distinguished guests
Members of the media

We are gathered here today to officially launch the South African National Petroleum Company (SANPC) as a Southern African petroleum champion supporting the region’s energy needs.

This marks a significant turning point in our process of stabilising state-owned entities, improve their business models and competitiveness, and in so doing, repurpose them to support the country’s drive for inclusive economic growth, job creation, reducing the cost of living, as well as alleviation of poverty and inequality.

It is this process that resulted in the merger of the three Central Energy Fund (CEF) subsidiaries – iGas, Strategic Fuel Fund (SFF), and PetroSA – to allow the state to meaningfully participate in the oil and gas developments by optimising the operating assets and financial resources of these entities.

Building on the success of the stakeholder engagement in November last year, this gathering further provides us with an opportunity to unpack SANPC’s value proposition and its strategic play in its quest to become a leading player in the petroleum sector, tasked with ensuring energy security, driving new technologies, developing and enabling essential infrastructure, and fostering strategic partnerships.

In the wake of evolving global megatrends, including the persistent push to shift away from fossil fuel usage, the SANPC is expected to operate in an increasingly volatile, unpredictable, and polarised world. Notwithstanding the shift in demand towards cleaner sources of energy production, the increasing population and the need for industrial growth in the short-to-medium term, means the demand for fossil fuels is expected to rise for the foreseeable future.

To this end, the SANPC is expected to oversee strategic planning, coordination, and governance of the country’s petroleum resources, and thereby contribute to the country’s sustainable development and inclusive economic growth. For the entity to generate revenue for self-sustainability and sufficiency, it must take advantage of the strategic partnerships and national capabilities in the energy industry to champion energy supply and investment in associated infrastructure.

With the ever-growing demand for natural gas, in addition to the supply constraints, as well as inadequate petroleum development due to pressure from lobby groups against oil and gas developments, our nation is set to experience a gas deficit in the coming years. Although iGas has historically been a successful, yet inactive, custodian of South Africa’s gas infrastructure, the SANPC is expected to become an active participant in gas infrastructure.

The entity will have to ensure that maximum value is extracted from the interest it holds in various blocks, including the blocks off the Southern African coast, while positioning itself to capitalise on the shifting demand towards cleaner based energy sources.

Since 2009, South Africa has experienced an 11% year-on-year growth in imports of fuel relative to local market production. This increase has largely been driven by a decline in local refinery capacity and the simultaneous increase in demand for refined product. We cannot be complacent with a situation where local refining capacity accounted for about 80% of finished product consumed in 2010, compared to less than 35% in 2022.

For far too long the South African refining capacity has been largely held by international oil companies (IOC), with many of them pulling out of manufacturing capacity, and many small to mid-scale refineries being converted to storage units, South Africa’s liquid fuels supply and economic stability is increasingly vulnerable.

The SANPC will need to ensure sufficient access to refined product, and thereby, fulfil its mandate of providing energy security to South Africa in line with the SANPC Bill which designates the entity to manage strategic oil reserves and storage of crude oil on behalf of the state.

It is against this background that we fully support the SANPC in its concerted efforts to reinstate the PetroSA’s Gas-to-Liquids (GTL) refinery in Mossel Bay and to rebuild the erstwhile South African Petroleum Refinery (SAPREF) in Durban. The revitalisation of these assets underscores South Africa’s investment and growth strategy in the energy value chain geared to lay a solid foundation to address the challenges that lie ahead in the security of South Africa’s energy future.

To enable the entity to deliver on its mandate, we had to ensure good governance, and in so doing, reduce both the operational and financial risks; hence, we swiftly appointed the board of directors, an interim CEO, as well as the non-executive directors in April last year. Since then, tremendous work has been done in winding down the outstanding matters and getting governance arrangements going.

We are particularly pleased with the progress made in the transfer of employees and assets from the three entities to the SANPC. It is, therefore, essential for the SANPC board and the management to ensure that this entity builds sufficient technical capacity and skilled workforce for the success and viability of the entity. For the entity to succeed, it must have a strong leadership with vision, common objectives, and ability to develop managerial capacity. It is equally important for all employees to foster a new culture and a sense of community that encourages collaboration and teamwork, as well as transparent and honest communication.

In conclusion, a task at hand for all of us is to ensure that the entity remains financially sustainable and independent in order to fulfil its developmental mandate.

I thank you.

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