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(Bloomberg) — South Africa plans to increase its strategic oil reserves for the first time since the apartheid government stockpiled crude, adding to measures across the continent to mitigate supply shocks.
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The country last built up its emergency stocks in the 1970s, when the United Nations imposed sanctions on the state due to its policy of institutionalized racial segregation, leading to the construction of the 45 million-barrel Saldanha Bay storage hub on the Atlantic coast.
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Supply concerns and price hikes caused by the US-Israeli war on Iran war have revived the original purpose of the facility: to act as a buffer from extreme oil-supply shortages.
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South Africa estimates 10 million barrels are needed to make up for the current inventory shortfall, the Department of Mineral Resources and Energy said in a draft policy document published July 9 for public consultation.
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The National Treasury and the South African National Petroleum Co. “will develop financing mechanisms and instruments for the financing and guaranteeing strategic petroleum stocks,” it said.
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The DMRE and the SANPC didn’t immediately respond to messages requesting comment.
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The DMRE proposes that 60 days of demand be covered by reserves, of which about two-thirds will be crude and the remainder oil products. That would amount to about 36 million barrels, worth billions of dollars, based on US Energy Information Administration estimates that put South Africa’s demand at 600,000 barrels per day. Licensed wholesalers and importers would be required to to keep 21 days of inventory under the plan.
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