SA’s oil supply in danger

2012-05-11 00:00

SOUTH Africa has fewer than seven weeks to reduce its oil imports from Iran “significantly” at the insistence of the United States.

If that does not happen the country could once again face international sanctions and an oil shortage after only 19 years.

The government, oil companies and banks that pay Iran for oil have to give America an official undertaking by June 28 to reduce oil imports from the Persian Gulf state and visibly apply it.

At least 26% of South Africa’s crude oil is imported monthly from Iran.

South African Petroleum Industry Association (Sapia) CEO Avhapfani Tshifularo told Beeld that “it is not a business decision for us. It requires a political decision about political pressure.”

However, if South Africa does not cut back drastically on its oil imports from Iran, it will have to ask the U.S. very soon for postponement of, and temporary exemption from, financial sanctions.

Although several diplomatic sources and the Department of Energy have confirmed that “highly sensitive” discussions are taking place daily, this request has not yet been made to the the U.S., Beeld was told.

“We expect a cabinet decision on this by the end of May. We will be led by government on this.

“It is simply not possible to switch from one supplier to another just like that. It will require a lot of time and money,” Tshifularo said.

The entire Iranian banking sector, including its central bank, to which the oil payments are made, are identified in U.S. laws as institutions that “finance terror” and pose risks to the global financial system through money laundering.

The United States’ entire financial system will be legally obliged from July 1 to stop any payments to Iran by countries that do not comply with the requirements of those laws. South Africa is one of those countries.

If the government does not come to some agreement with the U.S. before June 28, South Africa will not be able to make any payments for Iranian oil through the U.S.-dominated international financial system.

It is highly probable that Iran will then be forced to suspend its oil exports to South Africa, with incalculable consequences for fuel consumers.

The Department of Energy said in a statement in March that “there is no reason for panic”, as alternative oil sources were being sought.

A spokesperson, Thandiwe Maimane, said this was still the government’s position and confirmed that the cabinet would take a decision by the end of May.

However, no other relevant government department would comment on the current state of affairs yesterday, and neither did the government’s chief spokesperson, Jimmy Manyi.

South Africa is one of 13 countries not temporarily exempted from the consequences of U.S., British and European Union sanctions against Iran. Japan and 10 European countries have achieved “significant reduction” and have 180 days from July 1 to reduce oil imports from Iran even further.

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