South Africa has significantly reduced oil imports from Iran in order to avoid penalties from the United States, the department of international relations and cooperation (Dirco) has said.
The Iranian stock, which supplied 29% of the South African demand, has been significantly reduced according to Dirco spokesperson, Clayson Monyela.
A Reuters report on Thursday quoted deputy foreign minister Ebrahim Ebrahim as saying no Iranian oil is flowing into South Africa. “If there is any, it is very little.”
Monyela told the Mail & Guardian there was a bilateral discussion wherein it was agreed South Africa would scale down its oil imports from the Middle East nation. “The US is happy with the measures which have been taken and no penalties will be imposed on us,” he said.
In February the European Union joined the US in banning oil imports from Iran. The US government placed sanctions on Iran in a bid to force it to abandon its nuclear programme. A new US law provides for sanctions on foreign financial institutions for certain kinds of transactions, including those related to petroleum and petroleum products, with the Central Bank of Iran and designated Iranian financial institutions.
On Tuesday the Obama administration exempted 10 EU countries and Japan from US economic sanctions because they have significantly reduced their purchases of petroleum from Iran, Associated Press reported.
Monyela referred all other questions to the department of energy which, as yet, have been unable to comment on the matter as the deputy director general for hydrocarbons and energy planning, Tseliso Maqubela, was not available.
On Sunday, Maqubela told the Mail & Guardian, “We have formed a task team to look at a variety of scenarios and the best way to respond should we be called to do so.”
“We hope to conclude our work by the end of May and hopefully have a comprehensive response strategy should we ever need one. But we still feel there is a window for negotiations and a possible resolution to the matter instead of sanctions,” Maqubela said.
This week, Energy Minister Dipou Peters, was also quoted by Bloomberg as saying the country is “looking at all options” and is not ruling out the possibility of continuing oil purchases from Iran.
Although the latest available figures show a quarter of South Africa’s oil imports are sourced from Iran, Monyela said the ratio used to be 70% at one point, before scaling back in recent years.
But executive director of the South African Petroleum Industry Association, Avhapfani Tshifularo, said he found it hard to believe South Africa had reduced its oil imports from Iran in such a short time — these matters do not simply change overnight as oil import agreements are made months in advance. He also noted because of sanctions, Iranian oil has been sold at a discount to consuming countries and South Africa would now have to pay a premium price for oil sourced elsewhere.
The likely alternative oil supply would be from Saudi Arabia. “They have the potential to assist and the capacity to do it,” Tshifolaru said. “In the global scenario we [South Africa and its oil consumption] are so small, it’s a no brainer. If Saudi can service Europe it can certainly service us.”
While Saudi Arabia also offers a light grade of oil, which our refineries would be able to handle easier than heavy grades from elsewhere in the world, Tshifularo said any shift of grade, no matter how slight, would involve some infrastructural changes. “You won’t be able to change grades without having to tweak something,” he said.
Last month however, Sasol revealed it was diversifying its crude-oil sourcing to mitigate risks associated with oil supply disruption from the Middle East.
Elizabeth Trudeau, spokesperson for the US Embassy in South Africa, said the US continues to have discussions with countries around the world on this issue, including South Africa. But she said they would not discuss the details of any of those discussions.
The focus needs to be drawn back on why the US has imposed sanctions on the oil-rich country. “The international community has supported us. Iran needs to be more transparent about its nuclear programme. This is not hard stuff, Iran knows what it has to do,” Trudeau said.