Pressure on SA over Iran oil

2012-03-20 22:25

Washington - Twelve additional countries that import Iranian oil may eventually be subject to new US financial sanctions unless they significantly cut their purchases, a senior US official said on Tuesday.

The official, speaking as US Secretary of State Hillary Clinton was expected to exempt Japan and 10 European Union countries from new US sanctions, said other importers could look to the example of Japan, which cut Iran oil purchases from 15%-22% over the last half of 2011.

Japan has said it is close to an agreement with the United States over how much Iranian oil it would have to forgo in order to win an exemption from the US law set to kick in at the end of June whereby of countries fail to significantly cut their reliance on Tehran's oil, their financial institutions could be blocked from US markets.

Iran is South Africa's leading crude supplier.

The United States has pressured many of Iran’s biggest oil buyers in Asia to reduce their purchases in a Western push to starve Tehran of funds for its disputed nuclear programme.

Countries are scrambling to reduce their Iranian oil imports in order to avoid the harsh US sanctions.

Saudi Arabia, the world's top oil exporter, has said it will fill any oil supply gap created by the loss of Iranian oil.

Recently, Energy Minister Dipuo Peters told Reuters South Africa hopes to have a plan by the end of May for replacing Iranian crude that currently makes up a quarter of its crude imports.

Iran makes up about 29% of imports by Africa's biggest economy, according to the US energy information administration.

US energy officials visited South Africa in January but did not make any formal request to halt or reduce Iranian crude imports, South African officials said.

"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," Peters told Reuters during the International Energy Forum in Kuwait.

"We have given ourselves till the end of May to come up with alternatives, and we are engaging in talks with everyone, including Iran,” she said in an interview, adding that she had recently visited Tehran to discuss the issue.

Oil traders say Iran may have to offer steep discounts to keep its customers buying as pressure from Washington and Europe on Iran builds.

Iran has not offered South Africa cheaper oil to persuade it to buy more, Peters said, but South Africa will need to find cost effective alternatives to wean itself off Iranian oil.

"Price is certainly a concern for us and looking at the other options we have to consider the price," she said.

Many refineries in the country, including the privately-held Engen refinery, are designed to treat Iranian crude and adjusting them to handle others would be costly.

"We are worried about [Engen], that’s why we are engaging in talks with the owners and everybody else,” she said, adding that Venezuela could offer a viable alternative to Iranian crude.

- Reuters