Cape Town - Energy Minister Jeff Radebe said on Thursday his plans for potential South African involvement in an oil venture in South Sudan were above board and aimed at securing access to cheaper crude oil and curbing the local fuel price.
"As government we would want to get to a situation in which the prices of fuel compare favourably with those of oil producing countries," Radebe said in a statement four days after the Sunday Times alleged that he was racking up unauthorised spending in pursuit of a "dodgy" oil deal with the fledgling, war-ravaged state.
He said this aim had also seen him hold talks with Nigeria, Equatorial Guinea and Botswana's energy minister.
"South Sudan is a significant oil producer with estimated reserves of 3.5 billion barrels of crude oil. It also has 3 trillion cubic feet (tcf) of natural gas in its estimated reserves. The country’s reserves are ranked third largest on the African continent after Nigeria and Angola," Radebe said.
South Sudan is however landlocked and relies on a pipeline passing through Sudan to get oil to the market.
The joint investment project between South Africa and South Sudan therefore looks towards finding an additional export route, which would bring oil reserves to other markets, including South Africa.
The project was initiated by an invitation from South Sudan late last year to take part in its oil and gas sector and Radebe was authorised to sign a memorandum of understanding on behalf of the government.
Radebe said the joint project envisioned establishing an exploration block, followed by a pipeline, new refinery and eventually a new terminal.
"This will unlock the reserves of South Sudan to be self-sufficient, serve regional markets and will bring value, financially and strategically, for South Africa and South Sudan," he said.
"This is not only for South Sudan but for the East African region including Ethiopia, Tanzania, Uganda and Kenya, with Sudan creating a robust market that facilitates trade and other investment opportunities."
He said the claim in the Sunday Times report that two other countries had looked into the feasibility of such a venture in South Sudan and concluded that it was not worth it, was not backed up by the level of interest and activity evident from other nations.
"Out of five members of BRICS countries, three major players in the petroleum sector (i.e. Russia, China and India) are already in South Sudan," Radebe said.
The Sunday Times said Radebe had already spent more than R20 million in pursuit of the deal, which has an estimated cost of US$ 1billion, including hiring a private jet.
In response, the minister said the project had spent no more than R 2.2 million, including personnel costs and travel.
"The basis and source of the R20 million mentioned in the Sunday Times is misleading," Radebe said. "The hiring of an aeroplane to travel to Juba was due to a critical business need and was duly approved in line with Treasury Regulations after consultation with National Treasury."