South Africa Refurbishes Crude Storage Tanks

South Africa plans to refurbish more crude oil storage to bring into use to take advantage of new finds in Africa and add to already brimming stocks.

Its Strategic Fuel Fund Association (SFF), which manages the country's emergency crude stocks, wants to refurbish its 7.5 million barrels storage tanks near Cape Town, a document showed.

The 39 crude storage tanks at the SFF's Milnerton terminal, which receives crude through a pipeline from Cape Town port that is owned and operated by Chevron (CVX), are undergoing integrity tests to determine their safety.

SFF leases storage capacity not required for strategic stocks and uses this income to help cover the operational costs of maintaining these stocks.

"To position itself for this opportunity, SFF is refurbishing its Milnerton tanks that are above ground and well sized (200,000 barrels each)," the government-owned entity said in a document handed to parliament's energy committee.

"We are making sure they are safe to operate, that they still capable of keeping crude oil before we start refurbishing," Mfano Nkutha, chief operating officer at SFF told Reuters.

Only three tanks at Milnerton are currently leased for commercial storage, with the terminal not considered appealing to third parties because it can only transfer crude oil to a refinery owned by Chevron.

The oil major also owns and operates a pipeline linking Milnerton's tanks to Saldanha Bay terminal, South Africa's main storage facility with a capacity of 45 million barrels.

South Africa's department of energy has proposed that the government holds 60 days of stocks - 42 days of crude and the balance 18 worth of refined products - while oil companies would have to keep 14 days of refined products at their own cost.

Africa's most advanced economy ran out of petrol and diesel in 2005/06 and studies suggest any repeat would cost the economy around 1 billion rand ($78 million) a day.

The petroleum products supply deficit is forecast to reach 11.8 million litres in 2015 from a deficit of 2.9 million litres in 2006, said SFF.

"SFF maintains that the supply deficit will continue to grow," it said.

South Africa is a net importer of crude oil and refined petroleum products, mainly from Saudi Arabia, Nigeria and Anglola.

Reporting by Wendell Roelf