Johannesburg - South Africa’s Central Energy Fund said that it has emergency “access” to adequate crude-oil stocks after reserves were sold last year.
The CEF, which manages the country’s reserves through the Strategic Fuel Fund, transferred titles for 10 million barrels of crude oil to companies in December as part of a stock rotation, director Tseliso Maqubela said in a phone interview Thursday. “In an event of an emergency,” the contracts stipulate that the fund has first right to the oil, he said. The parties also must agree before any of the crude oil is lifted. Taleveras Group and joint ventures of Vitol Energy and Glencore bought the titles, he said.
Following the rotation, South Africa now has access to 90 days of reserves, or 30 days more than needed, compared with a 21-day buffer before the transaction, the CEF said in an e-mailed statement.
Business Day newspaper reported that the fund sold 10 million barrels of oil, almost the entire stockpile, leaving it with 300 000 barrels, or less than a day of cover. The sale brought in $280 million for the fund, according to the report, citing CFO Sibusiso Gamede.
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The CEF’s Strategic Fuel Fund has revenue of R170 million ($11 million) a year from rotation of strategic stocks, Energy Minister Tina Joemat-Pettersson said in a budget speech earlier this month. The Department of Energy is the CEF’s primary shareholder.
“It is a simple rotation at market prices,” SFF chairman Riaz Jawoodeen said in a text-message response to questions. The fund undertook the rotation partly due to deterioration of the oil quality and also because the stock was relatively high-sulfur crude, which isn’t as environmentally friendly, Maqubela said. South Africa uses about 450,000 barrels of crude a day, he said.
Brent crude oil averaged $39.15 a barrel in December. It rose 0.2 percent to $49.85 at 3:17 p.m. in London.
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