Sasol CEO warns South African airlines are playing a dangerous game with fuel

South African jet-fuel suppliers need to keep higher stock levels in the event of production outages, such as the one that occurred at Sasol’s Natref refinery last week and prompted airlines to make backup plans, CEO Simon Baloyi said.

Natref has taken measures following issues on some units, leaving a “low probability” of jet-fuel shortages at OR Tambo International Airport, but suppliers should be better prepared, he said in an interview on Tuesday. 

Airlines last week made contingency arrangements, and the Department of Energy convened an emergency meeting with the airport and the Fuels Industry Association of South Africa due to the refinery disruption.

Baloyi said that, in light of current geopolitics — which have included oil shocks to both prices and physical supply because of the war in Iran — he was surprised by the inadequate levels of jet fuel held by suppliers.  

“You can’t run with low inventory,” he said. “Operational plants are operational plants — they’ll go up, they’ll go down.”

The war in Iran has forced South Africa and other nations on the continent that rely on fuel imports to find new sources of supply.

That’s also highlighted the need for higher inventory levels to prevent future shortages.

The Department of Mineral and Petroleum Resources proposed in July that 60 days of demand be covered by reserves, of which about two-thirds will be crude and the remainder oil products.

Licensed wholesalers and importers would be required to keep 21 days of inventory under the plan.

Vitol Group’s Vivo Energy is building fuel tanks at a former refinery site in the eastern port city of Durban, a $130 million project that began before the war.

The 300,000 cubic meters of capacity is scheduled to be completed in the third quarter of next year.