VENTURES: Oil Storage Big Business In W Cape
Recent Western Cape Business News
PETROSA has thrown open the doors for other potential users of the oil storage facilities at Saldanha Bay and at Milnerton, in Cape Town.
Many potential customers have reportedly shown great interest in using the spare capacity at the tank farm at Milnerton in Cape Town.
The Milnerton tank farm includes 39 crude oil above-ground storage tanks. Only between five and eleven of the tanks are in use. This leaves the possibility of contracting out up to 28 of these tanks to either a local or overseas customer.
The present oil market is in ‘contango’, a term used in the oil trade to describe a situation where higher oil prices are anticipated. The oil price has halved in recent months. Oil traders are storing oil in anticipation of price increases. Storage facilities throughout the world are in short supply. This creates the possibility that South Africa may find a local or international customer for its additional storage capacity at Milnerton, CBN reported in April.
The hiring out of storage facilities is a highly lucrative business. The Strategic Fuel fund has shown annual profits in access of R150 million for the past three years, and this has mainly been due to its letting contracts for the oil storage tanks at Saldanha Bay.
The Saldanha tank farm consists of six huge concrete containers, which hold 7.5 million barrels of oil each. Built partly underground it has a total capacity of 45 million barrels of oil, which makes it the biggest oil storage facility in Africa, and one of the biggest in the world. A measure of its size is that it would take the cargoes of between 20 and 22 very large oil ships before the tanks are full.
South Africa’s strategic fuel supply of some ten million barrels is stored at Saldanha. One tank is allocated to Chevron and the additional capacity is used by foreign oil merchants. This has become a highly profitable operation.
The Saldanha oil facility was built at a time when South Africa was facing an oil embargo, and could have become a ‘white elephant’ once that threat was removed.
Strategic oil stocks held at Saldanha, as well as eight disused coal mines at Ogies in Gauteng, were drastically reduced. Aggressive marketing found customers in Britain and Switzerland for the spare capacity in Saldanha, and a potential liability was turned into a profitable foreign exchange earner for South Africa.
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