South Africa is considering stockpiling crude oil “to prepare for any eventuality” should shipments be cut from Iran, the country’s biggest supplier, Energy Minister Dipuo Peters said.
“As government, our responsibility is to ensure security of supply,” Peters told Bloomberg at an event in Johannesburg late yesterday. The country is “looking at all options” and is not ruling out the possibility of continuing oil purchases from Iran, she said.
President Barack Obama signed a law on Dec. 31 that denies foreign banks that do business with the Central Bank of Iran access to the U.S. financial system. The U.S. may bar access to its banking system should a country not make “significant” reductions in its Iranian crude oil purchases during the first half of this year.
Iran supplied 5.5 million metric tons of oil to South Africa in 2010, 29 percent of total imports, according to the South African Petroleum Industry Association. Iranian crude trades at a discount to global market prices.
South Africa’s cabinet will report tomorrow on the progress of a governmental team tasked with investigating U.S. sanctions against Iran and the search for alternative suppliers, Peters said.
Concerned About Costs
“Alternative options of supply come at a premium,” she said. “We’re concerned about the cost implications this will have.” A final report to cabinet on from the Iran task team is due at the end of May, she said.
Petroliam Nasional Bhd.’s Engen unit, which operates the country’s second-biggest refinery with a capacity of 135,000 barrels a day, sources about 80 percent of its supply from Iran. South Africa is working to ensure the refinery would remain open to secure fuel supply and protect jobs, Peters said.
“As an integrated group we always have contingency plans on our supply chain and sources,” Tania Landsberg, a spokeswoman for Engen, said in an e-mailed response to questions on March 19.
Sasol Ltd. said less than 20 percent of the crude used by the Natref refinery, which it owns with Total SA, is from Iran, and that it’s diversifying supply away from the Middle Eastern nation. The company is also in preliminary talks to divest a 50 percent stake in the Arya Sasol Polymer Co., which it co-owns with Iran’s Pars Petrochemical Co. The assets have a so-called carry value of about 4 billion rand ($527 million), Sasol said.
Royal Dutch Shell Plc, which owns the nation’s biggest refinery with BP Plc, known as Sapref, declined to comment. BP and Chevron Corp., which operate a refinery in Cape Town, don’t buy Iranian crude.
Cellphones
MTN Group Ltd., Africa’s largest mobile-phone operator, said March 7 it will remain in Iran unless South Africa applies sanctions against the country. Iran is MTN’s second-biggest market by subscriber numbers. It owns 49 percent of MTN Irancell Telecommunications Services Co., the second-largest mobile operator, with the balance held by Iran Electronic Development Co.
The EU decided two months ago to stop Iranian oil imports effective July 1. The EU and U.S. are trying to pressure Iran to abandon any work it may be conducting to acquire nuclear weapons capability. Iran insists that its nuclear program is strictly for civilian energy and medical research.
Source: Bloomberg