Rebounding demand for Southern Africa's minerals and natural resources is stimulating demand for oil products within the region, a new report from Frost & Sullivan has found. But inadequate infrastructure and inefficient regulatory processes were increasing costs and undermining the security of supply in some countries.

Energy analyst Ross Bruton says that the expansion of the region's downstream market will continue to be driven primarily by the growth in demand for oil products in South Africa, which was already consuming 575 000 bbl/d of crude in 2008. The remaining countries within the region had significantly lower consumption levels of below 30 000 bbl/d in 2008.

The total production capacity of refined goods within South Africa amounts to 692 000 bbl/d, or 88% of Southern Africa's refined liquid fuel production from a total of ten operating refineries. South Africa was also responsible for 72,3% of oil imports into Southern Africa, which are estimated at 319 000 bbl/d.

The major oil marketing companies within Southern Africa included: BP, Engen, Chevron, Sasol, Shell and Total, with Engen estimated to have the largest market share at 21%, followed by BP (18%) and Shell (17%). Coal-to-liquids producer Sasol is estimated to have a market share of 8%.

But Bruton argues that old and damaged infrastructure has "restrained the ability to operate effective business practices within Southern African countries". "Underdeveloped and neglected road networks increase the logistical costs of fuel transport, thereby increasing retail costs," he adds.

Frost & Sullivan also asserts that the higher oil price is providing support for the intensification of oil exploration efforts in the region, but particularly in Angola, which was already responsible for 81,06%, or 1,02-million barrels a day, of Southern Africa's oil exports in 2009.

Crude oil production in Angola is expected to increase in the near term due to an increase in inland exploration activities taking place in the Cabinda province, a region previously inaccessible owing to civil war. Further, deep and ultradeep offshore exploration and development activities were picking up.

Almost all of Angola's oil exports are to the US and China, but the country also exports to South America and Europe.

The country has proven reserves estimated at over 13,5-billion barrels, which is far larger that the country with the second highest proven oil reserves, which is South Africa with an estimated 15-million barrels, mostly off the coast of Mossel Bay, in the Western Cape.

The economies of the Democratic Republic of Congo, Tanzania, Angola, Zambia, Mozambique, Namibia, Botswana, Zimbabwe and South Africa are covered in the report, which focuses on the infrastructure, operations and key participants in the upstream; refining and manufacturing; supply, transmission and trading; and the downstream segments of the oil and gas market.