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Cablegate: Fuel Product Supply Adequate - the Market Works

VZCZCXRO7222
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHSA #0215 0321201
ZNR UUUUU ZZH
R 011201Z FEB 08 ZDS ZDK
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 3342
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0730
RUEHRL/AMEMBASSY BERLIN 0584
RUEHBY/AMEMBASSY CANBERRA 0607
RUEHLO/AMEMBASSY LONDON 1404
RUEHMO/AMEMBASSY MOSCOW 0730
RUEHOT/AMEMBASSY OTTAWA 0560
RUEHFR/AMEMBASSY PARIS 1263

UNCLAS PRETORIA 000215

SIPDIS

C O R R E C T E D C O P Y (ADDING SENSITIVE CAPTION)

SIPDIS
SENSITIVE

STATE PLEASE PASS USAID
STATE PLEASE PASS USGS
DEPT FOR AF/S, ISN, EEB/ESC AND CBA
DOE FOR T.SPERL, G.PERSON, A.BIENAWSKI, M.SCOTT, L.PARKER

E.O. 12958: N/A
TAGS: ENRG EPET EMIN SENV MGMT SF
SUBJECT: FUEL PRODUCT SUPPLY ADEQUATE - THE MARKET WORKS

REF: A) Pretoria 168
B) Pretoria 132 and previous

1. (SBU) SUMMARY: Some observers have predicted potential
shortfalls in the diesel fuel market as some South Africans respond
to the electricity crisis by purchasing generators (Refs and
Septel). All fuel product providers and analysts spoken to note
that the market is functioning and providing adequate diesel and
other fuel products from Sasol, pipeline, rail, and road. They do
not anticipate any shortages in the foreseeable future. End
Summary.

2. (SBU) Shell's Fuel Marketing Manager - Africa told Energy
Officer South Africa's inland market for diesel and refined product
was "tight", but the market was functioning, so he did not forecast
any shortfalls in fuel products in the foreseeable future. He
described the market as follows:

i) 60 percent or 10.5 billion liters per annum: inland refining
(Sasol Segunda and Sasol/Total Natref)

ii) 40 percent from the coast, of which:
- - pipeline - estimated 4.2 billion liters per annum
- - rail - estimated 1.5 billion liters per annum
- - road - estimated 1.5 billion liters per annum

He said the inland supply situation is likely to remain tight until
2010 when a second, larger pipeline from Durban to Gauteng comes on
stream. However, the market functions well, so that - if needed -
additional trucks can come from the coast. In addition, tight
refinery capacity can be supplemented by imported refined product as
needed. (Note: Shell thought that South Africa is currently
importing refined product, but other sources said that was not the
case.)

3. (SBU) The Shell representative said that Shell was in the
process of acquiring generators for its service stations. He did
not foresee any shortfall in supply as individuals and companies
install generators, absent major installations by mines, but this is
unlikely because it is not economic for mine production. Mines use
back-up diesel generators only for emergency evacuation or
ventilation.

4. (SBU) Representatives of the South Africa Petroleum Industry
Association (SAPIA), Caltex, and the Department of Mines and Energy
confirmed to Energy Specialist that the diesel and fuel product
market is tight, but functioning adequately, so they also did not
foresee any shortages. Sasol's refineries are skewed for producing
gasoline, rather than diesel, but they emphasized that adequate
diesel can always be brought in by the diverse conveyances.
Refineries are identified as critical by Eskom and the SAG and they
generate significant electricity for their own operations. South
Africa is still exporting some refined product to neighboring
countries as the supply chain is described as very much integrated.

5. (SBU) COMMENT: The Embassy is considering the use of generators
as electricity back-up at residences. Industry marketers do not
foresee diesel availability as a problem in Gauteng and the rest of
the country. The Shell official also recommended consideration of
battery back-up, because disruptions are typically only two hours,
Qbattery back-up, because disruptions are typically only two hours,
and this solution might be cheaper, less disruptive (noise/fumes),
and sufficient to run core requirements, like security features.

TEITELBAUM

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