South African firms are scrambling to find ways to reduce the business they are doing with Iran after the US warned that all financial transactions, other than the supply of food and medicine, conducted with that country could lead to the imposition of sanctions.
While it is still not clear how South Africa will react to the US demand that business be halted, Reuters cited Deputy International Relations Minister Ebrahim Ebrahim as saying that South Africa had effectively suspended most of its oil imports from Iran and intended to abide by the US request to cut Iranian supplies significantly.
The US says its embargo is intended to place pressure on Tehran, a political ally of South Africa, to make its nuclear programme transparent.
US President Barack Obama signed the National Defense Authorisation Act into law which aims to cut Iranian oil revenues and discourage deals with the central bank of Iran by providing for sanctions on foreign lenders that knowingly facilitate “significant transactions” with the bank.
In terms of the law, South African companies had until February 29 to abide by the act, with the exception of the sales of petroleum products. Groups such as Sasol and Engen have until June 28 to abide by the act.
Bloomberg reported foreign ministry spokesman Clayson Monyela as saying that South Africa was indeed “downscaling” oil imports from Iran, partly in response to demands from the US. The amount of Iranian oil coming into the country was “very little”.
However, Department of Energy director-general Nelisiwe Magubane said that Iranian oil had in the 1970s made up 75 percent of South Africa’s supply of crude oil. This is now at 26 percent, itself down from 29 percent a month ago. “This figure fluctuates (monthly)… but there has been a decrease over a long period,” she said.
But Iran remains South Africa’s biggest single supplier of oil. Pressed on the policy being adopted by South Africa, Magubane said this was subject to investigation by a task team that would report to cabinet by May. She would not shed further light on the details of the response to the US demands but said that one of the options was to look for a temporary waiver of the US imposition of sanctions “to buy some time”.
This would ensure “that we have an appropriate response without (affecting) the economy of our country”.
US embassy press attaché in Pretoria Elizabeth Kennedy Trudeau explained that the US had issued the sanctions warning on December 31. South Africa and the US were engaged in “ongoing” talks.
Engen is the biggest buyer of Iran’s crude. BP, Shell and Total do not source Iranian crude oil.
Engen communications manager Tania Landsberg said any business decision “vis-à-vis” the latest developments on Iran sanctions “shall be made on commercial grounds aimed at minimising any potential business disruption in our endeavour to ensure supply… and safeguard the best interest of our stakeholders”.
“Being an integrated oil company which requires reliability along our value chain, we are assessing the impact arising from the tightening of US and EU sanctions against Iran to our business continuity.”
Sasol told Reuters recently that in view of recent developments on trade restrictions, introduction of both petroleum and non-petroleum sanctions and heightened military presence in the Straits of Hormuz, Sasol Oil had secured alternative suppliers to meet its crude oil requirements.