How To Start An Oil Company In South Africa

If you want to Start An Oil Company In South Africa, you must apply for a wholesale license from the Department of Mineral Resources and Energy.

The license allows you to Start An Oil Company In South Africa

The licence is valid for as long as your business operates.

What you should do

Complete the form Application for wholesale license, DMRE 38.

Send the application form to the Department of Mineral Resources and Energy regional office.

The Department will send you a letter stipulating that you must publish a notice of application in four newspapers.

You must provide proof of the publication of the notice of the application to the department.

Once you have a license, you must submit information on your business annually using the Wholesale license annual information (Submission Form), DMRE 30.

How long does it take

You should receive a response within 90 days from the date when the Department received proof of publication of the notice of application.

How much does it cost

  • R1 000
  • R500 annual licence fee.

How the oil and gas industry works – A quick introduction

Without boring you with big-sounding technical jargon, I’ll try to introduce you to the interesting and complex world of oil (also known as petroleum).

All the popular petroleum products we use today (like kerosene, petrol and diesel), come from a dark, smelly liquid known as ‘crude oil’.

Crude or ‘raw’ oil is mined from deep down under the earth. It is produced by plants and animals that died thousands of years ago (that’s why they’re called ‘fossil fuels).

For centuries, these fossils decayed under high pressure and temperature to produce crude oil. To reach this crude oil, big and heavy machines are used to drill thousands of feet into the earth’s surface. Around the world, every day, more than 80 million barrels of oil are produced by a handful of countries.

More importantly, crude oil may be very valuable but it’s not very useful until it is refined to produce the powerful products within it. (photo credit: theguardian.com)

To refine crude oil, it has to be transported away from the fields in the desert, swamps or ocean where it is produced to a large factory (commonly known as a refinery).

In a refinery, the crude oil is processed and heated to very high temperatures to produce petrol, diesel, kerosene, and several other valuable products. These products are transported by tanker trucks or pipelines to major depots and gas stations where you fill up your car’s petrol tank and buy some kerosene for cooking at home.

We seem to be talking a lot about oil; what about gas?

Well, drilling for oil is much like opening a bottle of Coca-Cola. When you remove the crown from the top of the Coke bottle, gas usually comes out first (sometimes with bubbles due to the high pressure) before you can drink the liquid Coke.

Gas (which is commonly known as ‘natural gas’) is a mixture of several gases that come out of the earth with crude oil. During drilling, you could find a well that contains only gas or a mixture of gas and crude oil.

Usually, when oil companies drill for oil, natural gas comes out of the ground first before the crude oil.

In some parts of the world, this gas is not used and may be burned or wasted (technically known as ‘gas flaring’). Nowadays, natural gas has become an important product commonly used as cooking gas and fuel for cars, power generators and factories.

Today’s modern oil business is quite organized. It is broadly arranged into three main segments known as the UpstreamMidstream and Downstream. Let’s find out exactly what they mean…

Companies in the Upstream oil business are involved in anything that concerns looking for oil (prospecting and exploration), drilling for the oil, and getting it out of the ground (production). When the oil is out of the ground, it is often cleaned, processed, stored and then sold off or transported to the refineries.

The Midstream sector involves the transportation (by pipeline, rail, sea barge, or truck), storage, and wholesale marketing of crude or refined petroleum products. Pipelines and other transport systems can be used to move crude oil from production sites to refineries and deliver the various refined products to downstream distributors.

The Downstream segment involves everything from refining the crude oil into all the important products we mentioned previously. The downstream also covers storage and transportation of all the refined products until it ends up in your car’s petrol tank or in your kitchen stove as kerosene.

How do I start a fuel distribution business in South Africa?

Complete the form Application for wholesale license, DMRE 38.

Send the application form to the Department of Mineral Resources and Energy regional office.

The Department will send you a letter stipulating that you must publish a notice of application in four newspapers.