With Iran due to have started destroying its stockpile of enriched uranium on Monday (January 20) and due to complete this within six months, the international community, in return, will start to ease sanctions. This could have a beneficial impact on this country’s oil imports. Back in 2012, SA foreign minister Maite Nkoana- Mashabane was busy fighting for relief from European Union (EU) sanctions on Iran oil imports – which would effectively cut SA off from about a quarter of our oil imports. Concerns raised over the adverse impact of Iran oil sanctions also saw SA sending a delegation to Brussels to discuss the impact caused by the EU-led sanctions. But, with the tightening noose of trade sanctions on Iran last year, we were forced to take heed of the US and EU sanctions threats on countries buying oil from Iran. By June, SA had stopped importing Iranian oil completely, and was exempted from US/EU financial sanctions. This put serious pressures on SA’s oil supplies as we hunted for alternative sources and caused costly problems for SA traders. The final choice was primarily West African crude from Nigeria and Angola. But this is a heavier crude than Iran light, and saw the local refineries having to re-configure their procedures to cope. But now that Iran oil is likely to soon come off the banned list will this mean a return to that country as our main source? Hard to tell, according to a refinery executive, who – with the usual oil industry urge for secrecy – had to remain anonymous. “When Iranian crude comes back into the trading pool it depends how it is priced,” he said. “I expect it will be discounted to begin with. But, with time, the price will then rise. “There will also be a bit more competition, and that could reduce oil prices as well.” So price might attract some oil companies back into the Iranian fold. “But,” said the FTW source, “some of the refineries may have moved into a different configuration for the alternative crudes available, and may not wish to revert.” He also pointed out that it all depended on what the individual oil companies decided to do – which oil sources they choose (based on availability, price and crude type) and what configuration they decide on. SA has the second largest refinery capacity in Africa after Algeria, So, said our source, there’s quite a variety of companies making this choice. Four refineries are located in Cape Town owned by Caltex/Chevron, with a capacity of 100 000 barrels per day. There are two in Durban. The remaining crude oil refiner is the Total-operated Natref in Sasolburg, producing 108 000 bpd. The other two refineries are the Sasol refinery with a 125 000 bpd capacity and the PetroSA-operated Mossel Bay refinery. So there is no clarity yet on whether SA will return to its Iranian source.
