The Strategic Fuel Fund said it will proceed with a court case to invalidate the sale in 2015 of its strategic oil stocks, despite crude prices recently dropping below what traders paid at the time.
The $280 million deal for 10 million barrels of South Africa’s reserves, criticised as a rip off when oil prices were in a slump, was sold to Taleveras Group and joint ventures led by Vitol Group and Glencore. That’s a better deal than what traders might pay today, with international benchmark Brent crude at about $21 a barrel.
The fund, "cannot be seen to honour an illegal sale of strategic stock by withdrawing a court process in lieu of oil-price fluctuations," it said in a reply to questions. "We are therefore forging ahead to have the sale of this strategic stock be nullified."
The SFF failed to notify the National Treasury of a sale of crude oil reserves and to properly safeguard the assets, the nation’s Auditor-General said in a 2016 report to lawmakers. The fund initially described the transaction as a rotation of stocks.
Glencore and Vitol declined to comment.
Taleveras in 2017 said the fund should have used the proceeds of the sale to buy fresh reserves. The Department of Mineral Resources and Energy didn’t immediately comment on whether it plans to replenish reserves at current oil prices.