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March 13, 2012 8:32 pm
The South African government plans to have alternatives to Iranian oil in place by the end of May as western powers tighten sanctions against the Islamic republic, the country’s energy minister said on Tuesday.
South Africa, Africa’s largest economy, relies on Iran for about 29 per cent of its oil imports, according to the US Energy Information Administration. It was the only big customer of Iranian crude not to have revealed that it was seeking alternative supplies.
“I would be lying if I said that the United States is putting pressure on us to cut Iran imports . . . but we are considering different avenues now,” Elizabeth Dipuo Peters, South Africa’s energy minister, told Reuters. “We have given ourselves till the end of May to come up with alternatives, and we are engaging in talks with everyone, including Iran.”
Ms Dipuo Peters said she had recently visited Tehran to discuss the issue. South Africa’s oil consumption is estimated to be slightly over 550,000 barrels per day, of which approximately 370,000 b/d is imported, the EIA says.
The US and Europe have imposed sanctions on Tehran’s crude exports amid concerns that Iran is attempting to develop a nuclear weapon. Tehran insists its nuclear programme is for peaceful civilian use.
The European sanctions against Iran – which are due to come into effect July 1 – have increased tensions in oil markets, driving up the price of benchmark Brent crude to nearly $126 a barrel. Oil prices recently rose to 10-month highs and hit an all-time record in euros last month over concerns that tensions in the Arab Gulf could disrupt supplies of Iranian crude.
The fear is that as more countries ditch Iranian imports, demand will increase for crude from Saudi Arabia, forcing the kingdom to draw down its spare capacity – one of the last remaining buffers against possible oil supply disruptions.
About a quarter of South Africa’s oil imports come from Saudi Arabia, according to the EIA, while Nigeria and Angola are also significant suppliers to the country.
South Africa, which has a temporary seat on the UN Security Council, has traditionally had cordial relations with Iran. South Africa businesses have a presence in the Islamic republic, with MTN, the telecommunications group, owning 49 per cent of Irancell, which has 33m customers.
MTN, which has been under pressure from United Against Nuclear Iran, a US lobby group, said in a statement on Tuesday that “whilst telecommunications companies in Iran have not been the subject of specific sanctions, we remain responsive to the views of our investors and other stakeholders.”
Sasol, the petrochemicals company, has a 50 per cent stake in Arya polymer plant, a joint venture with the National Petrochemical Company of Iran. It also imports about 12,000 b/d from the republic, which represents about 20 per cent of its crude requirement for processing at its Natref refinery.
The company has already announced that it is considering divesting from the polymer plant and it has begun preliminary talks on the issue. It is also diversifying its crude oil sourcing away from Iran.
“We review the global picture, where future growth will come from and as we have repeatedly said we are looking at North America, we do need to consider the broader geopolitical context,” said Jacqui O’Sullivan, a spokeswoman for Sasol.
Engen, which has the largest retail fuel network in South Africa, is also looking at diversifying its oil imports. “We are looking at alternatives and we do have contingency plans in place,” said Tania Landsberg, a spokeswoman at Engen.
She declined to say how much oil Engen imported from Iran.
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