JOHANNESBURG, July 16 (Xinhua) -- South Africa's plan to rebuild its strategic crude oil reserves could strengthen energy security and provide a buffer against global supply disruptions and price shocks, an energy expert has said.
Speaking to Xinhua in an interview on Thursday, independent energy expert Lungile Mashele said that South Africa has to seriously consider increasing its strategic oil reserves.
According to a draft policy released recently by the Department of Mineral and Petroleum Resources, the government proposes maintaining strategic oil stocks equivalent to 60 days of national demand, with about two-thirds held as crude oil and the remainder as refined petroleum products.
The proposal comes as South Africa seeks to rebuild emergency reserves following the controversial sale of around 10 million barrels of state-owned crude oil in late 2015 and early 2016, leaving the country with significantly reduced strategic stockpiles.
Mashele said increasing strategic reserves would provide a cushion against external supply disruptions and help soften the immediate impact of international oil price spikes on domestic fuel prices.
"Absolutely, larger strategic oil reserves mean you create a buffer between oil price shocks and the need to increase fuel prices. The larger the reserves, the greater the time buffer," she said.
Noting that South Africa, Africa's most industrialized economy, remains heavily dependent on imported crude oil, making it vulnerable to disruptions in global supply chains and fluctuations in international energy markets, she said rebuilding the country's reserves is both a strategic and necessary move in light of growing geopolitical uncertainty.
Yet, Mashele cautioned that strategic reserves alone cannot shield the country from sustained price volatility, while expanding the reserves would strengthen both the country's energy security and its strategic autonomy.
"A nation that is not energy secure or sovereign has very little economic or political power and cannot withstand geopolitical tension," Mashele said.
Pointing to recent instability in the Middle East and other geopolitical hotspots, Mashele said energy-importing countries have become increasingly aware of the need to strengthen strategic fuel reserves against potential supply disruptions.
Looking beyond strategic stockpiles, she said South Africa should continue pursuing a balanced energy strategy that safeguards affordability while advancing its long-term transition to cleaner energy.
The expert said the pace of the country's energy transition would ultimately depend on stronger economic growth and rising living standards.
"Energy transitions occur naturally when economies are performing well and people are sufficiently incentivized to adopt greener technologies," Mashele said.
