To Ghana in search of oil

2012-04-21 13:24

With the United States pressuring South Africa to cut oil imports from Iran, Deputy President Kgalema Motlanthe set off to Ghana this week to find the oil and electricity to keep South Africa afloat.

Motlanthe, with Energy Minister Dipuo Peters and Public Enterprises Minister Malusi Gigaba, left for Accra on Wednesday with officials from PetroSA in tow.

“They are looking at the possibility of buying oil from Ghana, and to talk about cooperation in electricity generation,” said Motlanthe’s spokesperson Thabo Masebe.

“We are looking to diversify our oil resources and get oil from Ghana. We also want to talk about cooperation in the electricity field,” he added.

South Africa is no stranger to Ghana, with more than 80 South African companies in various sectors, including mining, retail, insurance, transport, tourism, banking, telecommunications, construction, services, franchising, manufacturing, fishing, advertising, aviation and energy having stakes in the West African country.

The US is threatening to disallow any country from doing business with its federal bank if they buy oil from Iran. This could have a devastating effect on South Africa’s oil supplies if alternatives are not found urgently.

Petrol prices and related costs are expected to increase sharply.

Traditionally South Africa imported most of its oil from the Middle East (Saudi Arabia and Iran) with small amounts being sourced from Nigeria and Angola.

Following the decision by the US on Iran, the South African government decided to diversify sources of oil to decrease dependency on the Middle East.

All options are considered, government officials say, but it is common knowledge the strained relationship between South Africa and Nigeria makes it preferable for South Africa to look elsewhere on the continent.

Ghana’s reserve has reached 1.8 billion barrels, which makes it an attractive option.

South Africa also wants Ghana to buy more arms and rail expertise from it.

While he is there, Gigaba is expected to discuss the possibility of South African Airways establishing and co-owning an airline in Ghana. This is to create a hub for the airline in the Western hemisphere, with Accra in the centre.

According to a government official who is part of the delegation, SAA is disadvantaged because its hub, OR Tambo International Airport, is located “at the bottom end of Africa”.

“Most air traffic is in the north, and we are too far down in Africa. So we need a hub that will be able to serve the north better.”

An airport hub in Accra would mean flights from North America could be routed to the rest of Africa or to Europe.

Ghana does not have a national airline, but SAA would prefer to start an airline with the Ghanaian government instead of a private company to ensure security of the investment.

“We would want to co-own it. We will put in most of the money, but they will have a significant stake – you have to keep in mind national pride. And we’d probably call it Air Ghana or something.”

The official said Gigaba will start with exploratory talks and then take it up with Treasury.

“We don’t know if [Finance Minister] Pravin [Gordhan] will be keen on this, but if we can show this is how we can make money, it may work.”

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