Plan for government-run petrol stations in South Africa

The government’s newly formed petrol company is considering entering South Africa’s forecourt market and distributing finished products like gasoline, diesel, and petrochemicals to end-users and markets.

The South African National Petroleum Company (SANPC) came into full force on Wednesday, 14 May 2025, when the Central Energy Fund handed over the leased assets and funds to operationalise the new state-owned company (SOC).

The SANPC forms part of government efforts to shape the future of South Africa’s energy security, industrialisation agenda, and economic transformation. R5 billion would be made available in a phased manner to fund the SANDC’s operationalisation.

“We are laying a foundation for a high-performing, future-fit national energy champion that will be agile, efficient, and capable of delivering long-term value for all South Africans,” SANPC chairperson Sipho Mkhize said.

“SANPC is not just another company. It is a national asset. It embodies the government’s vision for a modernised, integrated, and impactful energy sector player.”

“South Africa needs a very strong and agile energy company to be able to respond to the energy challenges faced by the country, as well as to advance the key components of the National Development Plan.”

The new SOC’s website explains that South Africa’s economy is fragile, and there is a clear need for SOEs to play a positive role in infrastructure and key industries. 

Therefore, the SANPC is geared to play a driving role in rectifying various structural issues along the energy value chain through strong leadership and energy infrastructure development.

To achieve this, the new SOC’s core business in the energy value chain will be anchored on the following operational pillars: upstream, storage, midstream, and downstream.

Upstream operations refer to the initial stage in the oil and gas industry, encompassing the exploration, drilling, and extraction of raw hydrocarbons from underground or underwater reservoirs.

The SANPC’s storage operations will involve managing the state’s strategic crude oil stockpile and commercialising crude oil storage facilities.

Midstream involves the transportation, storage, and wholesale marketing of oil and gas, serving as the intermediary between extraction (upstream) and refining or sales (downstream).

The SOC will also have downstream operations, which include refining crude oil and processing natural gas. 

In addition, these operations involve distributing finished products like gasoline, diesel, and petrochemicals to end-users and markets.

At an event announcing the CEF’s handing over of assets to the SANPC, News24 reported that the new SOC has an “exciting pipeline of projects worth about R67 billion”.

The SANPC did not share details on its plans to enter the forecourt market but has stated its intention to “change the South African energy landscape.”

Major player leaving South Africa

The SANPC’s initial plans to enter downstream operations in South Africa come as several international petroleum giants are battling to buy Shell’s downstream assets in the country.

Bloomberg recently reported that Abu Dhabi National Oil Company (Adnoc) and Swiss commodities trading firm Gunvor are among the companies shortlisted to buy Shell’s assets. 

The publication said the two companies are strong contenders for the assets valued at about $1 billion.

Previous potential bidders included Trafigura’s Puma Energy, Sasol and South Africa’s PetroSA.

Shell has been looking to offload the assets, which include about 600 fuel stations and trading operations in Africa’s biggest economy.

This forms part of the company’s broader strategy to focus on regions and businesses that offer higher returns.

The first major move in this strategy came when Shell sold its stake in the SAPREF refinery, which it jointly owned with BP. 

Sapref is South Africa’s largest oil refinery, but was sold for a symbolic R1 to the state-owned Central Energy Fund after BP and Shell stopped processing there in 2022.

This was largely due to the refinery’s operational challenges and declining commercial viability.

Now, Shell is also looking to dispose of its downstream assets in the country. Bloomberg explained that these assets are attractive for trading firms since they ensure demand for fuels they can supply. 

This article was first published by Daily Investor and is reproduced with permission.