Sasol Limited : S Africa To Decide In May Response To US Sanctions On Iran
04/03/2012| 12:32pm US/Eastern
-- South Africa energy minister says May is deadline for deciding Iran imports
-- Engen, Sasol say they stopped buying Iranian crude oil
-- Energy minister worried cost of replacing Iran crude will hurt economy
(Adds South Africa import figures, company news, details throughout.)
By Devon Maylie
South Africa will respond in May to sanctions imposed by the U.S. on Iran, the country's minister of energy said Tuesday, noting though that rising energy prices will influence its decision.
"We have to explore our options before we decide to support them," Dipuo Peters told Dow Jones Newswires on the sidelines of a briefing. "We now have this cost issue...we are worried about that."
South Africa's department of international relations said last month that there are ongoing discussions with the U.S. over the new sanctions (which take affect June 28) the U.S. is imposing against Iran, in an effort to cut off revenue that could fund nuclear weapon development, a charge Iran denies.
Peters said the energy department is concerned that alternatives to Iranian crude will come at a premium. South Africa is struggling to maintain its growth forecasts and consumer spending has been a key pillar to growth.
Peters said she met U.S. officials in January, and another meeting should occur this month. The U.S. has been pressuring other buyers of Iranian crude--such as China, Japan and India--to buy alternatives.
South Africa's economy isn't forecast to grow more than 3% this year after expanding 3.1% in 2011, according to the central bank. South Africa has relied on Iran for 25% of its annual crude oil imports and the tensions between Iran and the U.S. have already forced South Africa to raise fuel prices.
In February the country imported 417,000 tons of Iranian crude at a cost of about $363 million, data from the country's revenue service showed.
Pressures from the U.S. have led some South African importers to find alternatives. Engen Ltd., which has the Malaysian national oil company as its biggest shareholder, said it suspended imports, without giving details on a timeline, or what alternatives it will source.
South Africa's department of energy said Engen was the biggest importer of Iranian crude and that it will cost the company SAR300 million to adjust its refinery to alternative supplies.
South Africa's Sasol Ltd. (SSL), the world's largest coal-to-motor-fuel producer, said it stopped buying Iranian crude oil and is sourcing more Arabian crude in its place. Sasol relied on Iranian oil imports for about 20% of its crude requirement, or 12,000 barrels a day, at its Natref refinery.
Sasol has U.S. and Canadian interests at stake. It's in the process of building a $10 billion plant in Louisiana to turn coal into motor fuel. It also has interests in shale gas projects in Canada and chief financial officer Christine Ramon said last month the company is actively looking at buying more in the gas sector, and that North America is an important area for the company.
Sasol also has a 50% stake in a $900 million Iranian petrochemical project, although it previously said it was looking at options to divest the stake.
Sasol repeated Thursday that it's "exploring a number of options with partners and interested buyers."
-Devon Maylie, Dow Jones Newswires; +27117837848; firstname.lastname@example.org