Oil deal: US company speaks up

2003-06-04 20:53

Cape Town - The United States-based oil company Camac "refuted any inference of wrongdoing" on Wednesday in its dealings with Nigeria as reported in the Mail and Guardian newspaper last week.

The newspaper wrote that a lucrative Nigerian crude oil contract destined for the South African government was taken up by South African Oil Company, an affiliate of Camac.

The report alleged that the contract was secured with the aid of President Thabo Mbeki in 1999, and diverted to an off-shore company with no benefit to South Africa.

"Instead, the company's local incarnation features figures linked to African National Congress interests," the newspaper claimed.

The Camac Group said in a statement on Wednesday that the South African Oil Company, registered in the Cayman Islands, was one of 18 companies that, in 1999, applied successfully for a contract from the Nigerian National Petroleum Corporation (NNPC) to buy and lift Nigerian crude oil.

No SA shareholders

"Most oil trading companies are registered in tax-efficient jurisdictions such as the Cayman Islands due to the thin margins and the large liability or exposure that oil trading entails.

"There are no South African citizens on the board of South African Oil Company Cayman, nor does it have any South African citizens among its shareholders," the statement read.

"A letter from the NNPC allocating the contract to (the) South African Oil Company was sent in error to the South African High Commission in Lagos. The letter was subsequently re-issued to (the) South African Oil Company, the applicant."

The name "South African Oil Company" derived from the fact that Camac had previously intended to use it as a vehicle for the relocation of its refinery from the US to South Africa to create capacity in South Africa to process Nigerian crude oil.

However, Camac was unable to attract enough local support for the project, and had to withdraw at a significant loss.

Existing South African refineries were not configured to process crude oil from Nigeria or any of the other West African producers.

Nigerian sweet crude oil sold at a significant premium compared to the heavy crude oil processed by South African refineries, most of which was imported from the Middle East.

Supports Nepad

"Apart from the fact that there is no capacity in South Africa to process Nigerian oil, it is the NNPC's practice, as far as Camac is aware, to extend contracts only to private upstream oil operating companies, oil trading companies and oil refinery owners," the statement said.

"Every year since 1999, (the) South African Oil Company has applied successfully to the NNPC for renewal of its contract but the NNPC has only been able to meet 25% of the volume it agreed to supply."

Despite its unsuccessful attempt to create capacity in South Africa to refine Nigerian crude oil, Camac and its affiliates had invested in other South African ventures and currently employed about 1 500 people in the country.

In Nigeria, Camac - with major oil companies - had made investments in oil exploration and production in excess of $1bn over the past 12 years.

"In both countries, the company's investments underpin its support for the New Partnership for Africa's Development," the statement read.

The Camac Group, with interests in oil and gas exploration, production and refining, was recently ranked as the largest African-American company in the US.

- SAPA