South Africa’s business industry has pinned its hopes on the government leaders to conclude the long-running discussions with Saudi Arabia over investing in helping the country improve its oil refining capacity.
Saudi Arabia, the world’s second largest oil producer, has been in talks dating back to 2018 with South Africa's Central Energy Fund (CEF) to partner with Saudi Aramco to build a $10 billion (R189bn), 300 000 barrel per day crude oil and petrochemicals refinery plant in Richards Bay to come on stream by 2028.
Speaking at a press briefing in honour of the visiting Saudi business delegation yesterday, the head of Invest SA, Yunus Hoosen, said, “I think as part of our broad energy mix and energy security, there are ongoing discussions bilaterally between the DMRE (Department of Mineral Resources and Energy) in South Africa and its affiliates, the CEF and PetroSA, and the Saudi Department of Energy.
“The ongoing discussion is to see the opportunity, and what could be done in terms of an oil refinery. But the discussions are ongoing,” he said.
This comes as South Africa’s crude oil refinery capacity dwindled after BP and Shell shut the South African Petroleum Refineries (Sapref) plant in Durban.
Sapref is the largest crude oil refinery in Southern Africa, having 35% refining capacity for the country.
The South African- Saudi Arabia Business Council has committed to boosting trade between the two countries as part of efforts to grow the two country’s respective economies.
Saudi-South Africa Business Council vice-chairman Dr Hisham Al Amoudi reaffirmed Saudi Arabia's commitment to investing in South Africa.
Al Amoudi said the South Africa and Saudi Arabia Joint Economic Commission and the Business Council was a good platform to further progress and boost inward investments between the two respective countries.
He noted that Saudi Arabia was committed to increasing investment across various sectors in South Africa.
“We are committed to increasing investments for mutual benefits and supporting South Africa’s economic growth. Our current investments contribute to South Africa’s gross domestic product,” Al Amoudi said.
The visit by the Saudi business delegation aims to not only strengthen current trade relations but also to explore opportunities for South African companies to increase market access with products that have high export potential to Saudi Arabia.
These products include motor vehicles for the transport of persons, fruits, mineral resources, chemicals, machinery and electrical equipment.
In August 2023, Saudi’s Food and Drug Administration lifted prohibition on South African meat imports for the first time in 20 years following an outbreak of foot and mouth disease.
Karan Beef, one of South Africa’s biggest meat producers, will be one of five local meat producers to access Saudi Arabia’s $2bn meat market.
Karan Beef director Matthew Karan said the firm had been negotiating for this deal for a number of years and nothing had happened until President Cyril Ramaphosa’s State Visit to Riyadh in 2022.
He said final approvals to start shipments of halaal cuts to the Kingdom of Saudi Arabia were now in place.
“I truly believe that if it wasn’t for that State Visit, and if it wasn’t for face-to-face discussions, we would have never been able to get the Saudis to open for us,” Karan said. "The plan is to start exports in the coming weeks.”
In 2023, South Africa's exports to Saudi Arabia increased to R7.3bn from R6.6bn in 2022, while imports from Saudi Arabia decreased to R54.6bn in 2023 from R73.6bn in 2022.
The exported goods included agricultural products, motor vehicles, and basic chemicals, whereas the import items mainly consisted of refined petroleum and related products, and crude oil.
Co-chair of the South African-Saudi Arabia Business Council Stavros Nicolaou underscored the need to increase trade and investment.
“From my vantage point, the Saudi Arabia market presents enormous growth opportunities for South African companies looking to expand their business in the gulf region as shown by local companies that are slowly establishing a presence in that region,” Nicolaou said.