This is a paid article which your subscription is allowing you to read.

“If we exploited it properly, we could pay down our national debt in 10 years.”

That is how James Lorimer, the Democratic Alliance (DA) spokesperson on mineral and petroleum resources, framed South Africa’s untapped oil and gas potential in a recent interview on The Common Sense Conversations podcast.

In that interview, he said South Africa produces only about 40% of the fuel it uses locally, including both refined fuel and fuel made from coal, with the remaining 60% imported. He said the loss of local refining capacity has left the country exposed, because it now relies more heavily on imported ready-to-use petrol and diesel, rather than processing crude oil at home.

Lorimer said South Africa uses about 600 000 barrels of fuel a day. He said local supply comes from a small number of remaining facilities, including the Astron refinery in Cape Town, which can process just over 100 000 barrels a day, and the Natref refinery in the Vaal Triangle, which can also refine roughly another 100 000 barrels.

Sasol’s Secunda operations add about 150 000 barrels a day of fuel produced from coal. Taken together, these sources can account for roughly 350 000 barrels a day, more than half of total demand, however, Lorimer said more recent figures suggest domestic supply may be closer to about 40%. He added that the country had lost refineries in recent years.

Lorimer said South Africa still imports crude oil which it refines, mainly from West Africa, including Angola and Nigeria. He said the bigger issue is that the country no longer refines enough of its own fuel and therefore must import large volumes of ready-to-use petrol and diesel.

“The rest of it we’ve been having to buy in as finished product,” he said.

That refers to petrol and diesel that has already been refined overseas, rather than crude oil that can be processed locally.

Lorimer said much of that imported refined fuel appears to come from the Gulf and from refineries in India. He said this dependence creates a vulnerability because much of this fuel passes through the Strait of Hormuz, a key global oil route vulnerable to disruption.

“Show us who’s going to come through the straits when you can’t get shipping insurance… It’s quite a risk,” he said.

Lorimer said several factors lay behind the loss of refining capacity, including the cost of upgrading refineries to meet cleaner fuel standards, adapting to different crude types, and damage caused by fires and floods. He also said investors had to weigh whether large new spending made sense in the broader South African policy environment.

“You sit down… we need to invest several billion… and then you look at the kind of business environment… Do we really want to make a major commitment?”

Lorimer said that the recent price increases of petrol and diesel which reflected higher global oil prices would feed through the wider economy, including transport and agriculture.

As an example, he said a farm using 10 000 litres of diesel a month could face an additional R70 000 in costs [with diesel prices going up R7 a litre this month], illustrating how fuel prices feed directly into food production costs.

On the longer-term question of supply, Lorimer said South Africa has significant oil and gas potential, especially offshore. Referring to potential reserves off South Africa’s west coast, alongside where Namibia has already made discoveries, he said:

“If we exploited it properly, we could pay down our national debt in 10 years.”

Lorimer said progress had been slowed by legislation, missing regulations, and repeated court challenges to exploration projects.

“Every major hole… they oppose in court,” he said, referring to legal challenges brought against exploration drilling projects.

He said offshore exploration is expensive, putting the cost of a single offshore well at about R1 billion, even before any oil or gas is confirmed, and argued that lengthy delays make South Africa less attractive to investors.

Delays in approvals risked driving investment to other countries.

“You can’t just keep that money sitting around… the money will go elsewhere,” he said.

Lorimer said the decline in refining capacity and the slow pace of developing domestic resources were central to understanding South Africa’s fuel vulnerability, particularly as the country becomes more reliant on imported fuel and exposed to global price and supply risks.