Challenges in SADC Oil Trading

Doing business in Southern Africa in an extractive industry such as oil and gas has heightened my appreciation for West Africa’s local content and participation policies in the petroleum sector. The phrases, "local content and local participation" remains the kryptonite of major oil companies in South Africa.

South Africa has one of the most prolific markets on the continent yet lacks the involvement of its people, despite its seemingly enforced black economic empowerment codes, designed to encourage participation and grow black businesses post-apartheid.

In an effort to enforce this, the South African Department of Energy issued a series of downstream wholesale and import/export licenses of petroleum products to indigenous black owned business. Though a total of 8,000 licenses have been issued, to date only 26 are active, out of which almost none are actually black owned.

Entry into the South African market via its coastal ports is also very much monopolized by the majors. The coastal ports have a throughput capacity of 1.2 billion liters of fuels products between Cape Town to Durban, but sadly remain under-utilized by 50%, with excuses such as shut down maintenance, tank leakages and so on. 

As well as a deliberate attempt to control inflow into the market, pricing and to restrict participation by the majors. 

Most SADC countries are landlocked with the exception of South Africa, Mozambique and Namibia, with South Africa having most of the infrastructure network required for petroleum trading within the region, followed by Mozambique.

Thus, how do we as Africans resolve this trade barrier of our continent’s resources for the use and benefit of our people?