Saldhana Bay


Oil hub expansion in Saldhana Bay set to significantly boost Cape economy

The oil trade is roaring in this coastal Western Cape town.

Saldhana Bay


Two hours north of Cape Town, a quiet revolution is taking place in the Saldhana Bay municipality. Oil is the name of the game, and business is booming.

Fin24 report that Storage facilities on the Western Cape coast – just a few miles away from favourite tourist destination Langebaan – are set to be expanded over the course of the next year.

What is contango investment?

The Saldhana Bay operation has long been an attractive proposition for the oil industry. Strategically placed near the Cape of Good Hope, the location has become a hub for buyers who are deciding to hold on to their “black gold”.

The facility has been used for “contango” investment: This is basically a system that allows traders to profit even further from oil sales, by stashing their barrels then re-selling them when the price of oil has increased.

This happened in 2009 and again four years ago, when companies from Mercuria Energy Group to Vitol Group used the site.

Growth on the cards at Saldhana Bay

Now, the expansion will see Saldhana’s operation grow by a huge 30%, with 13 million more barrels expected to come to the Western Cape by the end of 2019.

Oiltanking are the world’s second-biggest independent provider of storage for crude oil. Their Chief Executive Officer – Dirk Exalto – has hailed the Cape for its excellent location. He also claims that international interest is rising, too:

“What we’re trying to do is try and create a more flexible blending location. We see a lot of flows from South Africa and West Africa that pass by the Cape.”

“There’s been interest in the project from international traders as well as refiners and South African companies.”

The expansion will see 12 tanks, capable of holding 1.1 million barrels of oil, installed at Saldhana Bay during 2019. In fact, the first three tanks should be up and ready by the end of this year. All in all, it will be a welcome boost for the Cape’s economy.

Also read: Rosslyn – The R50bn project throwing Tshwane into the spotlight