South Africa Open to Iran Coop. in Refinery Project

EghtesadOnline: South Africa, a net importer of refined oil products, is looking to West Africa and the Middle East, including Iran, for potential partners in a new refinery project, energy ministry officials said on Friday.

News ID: ۷۷۶۳۸۱

21 May 2017

Energy minister Mmamoloko Kubayi told parliament that the cabinet expects to decide by December whether to build the refinery that has been under consideration for almost a decade, Reuters said in a Friday dispatch from Cape Town.

National oil company PetroSA has promoted the idea of building a refinery with a capacity of up to 400,000 barrels per day on the east coast, but the government was put off by the $10 billion price-tag in 2010 and a lack of equity partners.

Kubayi said the refinery was now urgent because South Africa's oil imports were increasing, Financial Tribune reported.

She said that a public-private partnership to develop the refinery, which would be majority-owned by the government, was a preferred approach.

"By the time any new refinery is completed, the country will be importing in excess of a third of its fuel requirements," she said.

The acting director general at the ministry of energy Tseliso Maqubela told Reuters after a separate press conference that South African authorities were in talks with countries and firms from the Middle East and West Africa to build the refinery.

"At this stage no country is excluded," Maqubela said when asked if Iran was among the countries being considered.

He said there was no decision yet on the new refinery's production capacity or its construction costs.

According to reports, Iran's state oil company, NIOC, is pursuing plans to secure new customers by supplying crude oil to refineries that are designed or retooled to process Iran's heavy and sour grades. South Africa, which once relied on Iran for most of its oil imports, is in talks to resume crude oil imports from Iran for some of its oil processing facilities.

Royal Dutch Shell, BP, Total and Sasol are among the main refinery operators in Africa's most industrialized country.

--- Oil Imports From Iran

South Africa bought around 68,000 bpd of crude from Iran in May 2012, a month before it halted crude purchases as the US and EU pressured Tehran over its nuclear program.

Pretoria, which also gets oil from Saudi Arabia, Nigeria and Angola, has said it wants to resume imports from Iran since international economic curbs were lifted in 2016.

According to Thembisile Majola, the deputy minister of energy, building the refinery would help South Africa maintain some control over a vital resource such as petrol, diesel and jet fuel.

"There are some issues around sovereignty that are linked to refining capacity," said Majola.

Kubayi also said the government wants to increase the participation of black fuel wholesalers in importing crude oil, with an immediate focus on West African crude oil, which presently accounts for around half of South Africa's crude imports.

"The modalities of this strategic approach will be finalized after consultation with the major oil companies in this financial year," she said.