Energy demand and associated planning failure for handling wet bulk cargoes in South African ports.
Ndebele, Bhekisipho Sibusiso.
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Energy demand has intensified the debate on the capability (or lack of capability) of the South African port infrastructure to handle increasing wet bulk cargo. Coupled with this debate are numerous questions about whether the port system can address the planning failure for wet bulk cargoes associated with such demand and supply. Energy demand consists of demand for gas, crude oil and electricity and other forms of energy, while wet bulk cargo is liquid cargo that is throughput via the port system. This research examines the relationship between increased energy demand and the port infrastructure to process, store and distribute such energy. It will also analyse the impact of liquid energy as strategic stock and how this affects port planning. The relationship between energy demand and port infrastructure is studied because it sheds some light on the debate that has been a subject of discussion for years between port planners and maritime economists. The research looks at both short-term and long-term demand for energy in order to understand this relationship. In analysing energy demand it is critical that strategies for energy and resource security are examined to reveal how these have changed the traditional role of ports from being mere receivers of goods to being active participants in global logistics supply chains. The supply chains which need to be reformed and planned and which need to change in line with economic needs are also examined (van Niekerk 2002). Additionally, there is a need to look at crude oil versus refined product and how any change in quantities of either crude oil or refined product brought through the port system would possibly influence the region’s seaborne trade. This will also necessitate an investigation of how such changes in quantum will affect the demand for port infrastructure. This study in essence looks at liquid energy as strategic stock and tries to understand how it influences port development. It is also critical to present a narrative of both the changes in energy demand in South Africa and their effect on the planning, development and configuration of ports. Based on the relationship between energy demand and port development, the research attempts to analyse the debate around the economics of port expansion, with particular reference to the current discourse on the expansion of the port of Durban. The research will show both sides of the argument about the criticality of this move as implied by several authors, including Graham Muller Associates (2009), Mather and Reddy (2008), Bracking (2013) and Maharaj, (2013). Since the research is on port economics, it is therefore imperative to discuss the applicable port tariffs affecting the energy supply chain because they have a bearing on the subject. There are various reasons why energy demand, the planning failure concerning wet bulk cargoes and the linkage between the South African maritime and energy development need to be researched. First, the maritime sector, which is pivotal to development and has been deeply fragmented and under-resourced, is restricting its potential to play its part as the primary component of South Africa’s global competitiveness. Second, the industry has not been competitive and has been underperforming. This will also help develop and implement an integrated maritime industry that will enhance South Africa’s competitiveness in the global economy. In addition, the research will help in positioning the maritime industry as a key enabler to energy development, thus placing the maritime industry as the “10ᵀᴴ province” which hosts many industries such as energy development (SAMIC, 2012). This also helps to capture earlier debates on the importance of the maritime sector to energy development and economic growth. The focus of the study is an analysis of current energy demand and the available infrastructure in South African ports for liquid bulk. The ports covered in the study are Durban, Ngqura, Saldanha Bay, Mossel Bay and Richards Bay. This entails understanding the planning strategy in place to meet any changes in quantities of liquid bulk cargo handled by these ports. Emphasis is placed on the relationship between refining capacities (or lack of refining capacities) and sea-borne commerce, in particular the relationship between fuel demand and berthing space demand for wet bulk cargoes. The study also poses fundamental questions including the following: - Will limited capacity and concerns about sufficient capacity growth affect port infrastructure planning and availability, in particular infrastructure for wet bulk? - Is there a need to build more refineries to address the problem of meeting fuel demand and what are the implications of such a move on the port infrastructure? - If there is a need to build more refineries, is there a need for more berths because berthing space is constrained? Together with looking at refining capacities and implications on port infrastructure, there is a need to look at alternatives for the storage of semi-/refined products. This introduces a discussion on locating landside links near port areas. A further question is whether port planners are considering all these requirements in the South African port planning strategy for the next 30 years. In particular, the study looks at whether growth in demand for refining capacities will change the port infrastructure and whether our ports are geared to handle such cargo that is, is the port configuration and demand strategy geared for such demand? The need to build new refining capacities is essential in South Africa but there is also a need for more berths for wet bulk cargoes. Fundamental questions here include, inter alia, how to maintain the balance between wet bulk infrastructure and other cargoes, since ports by their nature are supposed to service a variety of clients and whether an increase in energy demand will lead to an increased demand for larger carriers calling into our ports and whether our ports are inclined to handle such bigger vessels? In the event of increased demand for wet bulk cargo will such a surge in demand justify the required port infrastructure expenditure? All these questions indicate the need for an economic model to assist in exploring the increased liquid bulk demand/berth space relationship, as well as throwing light on who should control that space. Hence, studies such as this one are invaluable. South Africa’s liquid fuels are supplied by an association called SAPIA (South African Petroleum Industry Association) which comprises Sasol (owning two refineries in Sasolburg and Secunda), Engen (one refinery in Durban), BP and Shell (which co-own the SAPREF Refinery in Durban), Total (which co-owns the Sasolburg refinery with Sasol), Chevron (owning a refinery in Cape Town) and PetroSA, which owns a refinery in Mossel Bay. These refineries also carry stock that is used by Eskom. Literature consulted indicates that an increasing demand for energy, particularly oil and gas, necessitates that port infrastructure is planned accordingly. A basic research approach has been adopted to achieve this. The purpose of using a specific research methodology was to obtain information from a representative sample of individuals in the ports and energy sectors that would reflect the thinking on the different issues identified by the researcher. This approach employed an in-depth literature review process to gather theoretical data from energy demand policy/economics as well as port planning methodology and systems. The researcher initially used interviews (structured, semi-structured, telephonic and face-to-face) as a means of gathering data. These data were then verified against textual information. The research used two research methodologies, namely, quantitative and/or qualitative research. Quantitative research is based on meanings derived from the use of numbers and depicted by means of diagrams and statistical comparisons. Qualitative research is quite the opposite. It is based on meanings expressed through words. Such meanings may be categorised and analysed through the creation of a conceptual framework. The scope of qualitative research includes in-depth interviewing, which is usually conversational rather structured. Since the research is based on case studies, the use of the qualitative method is adopted. The researcher used both qualitative and quantitative data and questionnaires to extract the views of the respondents. These views are captured and analysed and recommendations are made concerning energy and port development.
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