/ 1 August 2012

SA stops oil imports from Iran

Energy Minister Dipuo Peters.
Energy Minister Dipuo Peters.

June's crude oil importation report comes as US Secretary of State Hillary Clinton plans a visit to South Africa in a few days, but it remains unclear whether South Africa intends to permanently cut all Iranian imports in response to possible economic sanction – a major source of cash for the crude-dependent Middle Eastern nation.

Zodwa Batyashe, a spokesperson for the nation's Energy Ministry, did not immediately respond to a request for comment on Wednesday.

Monthly statistics from the South African Revenue Service (Sars) show the nation received the majority of its oil in June from Saudi Arabia, with Angola and Nigeria also contributing heavily. From May 2011 to May 2012, statistics show that about 35% of all crude imported by the country came from Iran. Government officials estimate the value of that crude to be more than $3.4-billion.

South Africa had been on a US state department's sanction waiver list, allowing the country to continue to import Iranian oil for 180 days so long as it began "significantly reducing" the amount it brought in. That waiver deadline has since passed, putting South African banks at risk of being cut off from the American banking system.

US President Barack Obama signed the sanctions into law December 31, which are aimed at trying to stop its suspected drive for nuclear weapons. The European Union also has put in place its own ban on Iranian crude, as well as prohibited firms from insuring shipments of Iranian oil.

Iran denies it wants to develop nuclear weapons. President Mahmoud Ahmadinejad has derided the sanctions his country faces as "ridiculous", though it could cripple a nation that depends on oil for some 80% of its foreign revenue.

Complete change
It remains unclear whether this signals just a one-month drop or a systematic change in South Africa's crude oil importation strategy. In January, statistics from the revenue service show South Africa also received no crude oil from Iran before ramping back up its imports in February.

In July, South Africa's Energy Minister Dipuo Peters said the nation was working with Iran to ensure it could continue importing crude oil from Iran, despite Europeans stopping insurance of Iranian oil ships.

South Africa is not the only African nation to back away from Iranian crude oil. In July, Kenya announced it ended a deal with Iran hours after the US warned it would be financially penalised for continuing to import its oil.

It remains unclear what immediate effect the halt of Iranian importation would have on gasoline production in South Africa. Iranian fields produce a type of oil known as heavy, sour crude, which contains more sulphur and is harder and more expensive to refine. South Africa has refineries already designed to process such crude.

South Africa's trade with Iran does not only include oil. South Africa's MTN Group owns 49% of the Iranian mobile company Irancell. A Turkish company that was an unsuccessful bidder for a telecommunications license in Iran has challenged the MTN deal in US courts, saying MTN bribed an Iranian and a South African government official, and encouraged South Africa to support Iran's nuclear power development programme at a meeting of the International Atomic Energy Agency.

Despite those other links, South Africa's economy depends on trade with the US, meaning any cut into that would hurt a country already hobbled by a weakened economy, said Scott Firsing, a fellow at the South African Institute of International Affairs.

"South Africa needs the US by far more than it needs Iran," Firsing said. – Sapa-AP