Grip of Oil Embargo on South Africa Loosens
ALTHOUGH many of the governments remain cautious about easing sanctions against South Africa, despite President Frederik de Klerk's pledge to repeal apartheid laws, the embargo on oil has been falling apart fast. ``We are getting offers from many new suppliers,'' says Gobus Van Zyl, general manager of the nation's Central Energy Fund. The Central Energy Fund controls crude oil supplies from practically every oil-producing country in West Africa, and European oil producers have been very keen to sell, Mr. Van Zyl says.Skip to next paragraph
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South Africa is eager to diversify oil supplies, he adds, but the transportation costs from Europe are a problem. ``It's a question of economics.''
Ever since the United Nations adopted the oil embargo against South Africa in 1979, the ban has leaked like a sieve. According to Shipping Research Bureau in Amsterdam, more than 90 percent of South Africa's foreign oil supplies start from the Gulf, with the United Arab Emirates as the leading supplier. SRB spokeswoman Huguette Mackay admits that since the shift in politics in South Africa, ``the embargo is strained but it's still in force.''
Although the Pretoria government does not release data on the subject, energy specialists estimate the country's oil needs at 330,000 barrels per day (b.p.d.). Of this, 120,000 b.p.d. are produced from three coal-to-oil plants operated by the coal and chemicals company Sasol, which is one-third government-owned.
Anthony Nyakyi, chairman of the Intergovernmental Group to Monitor the Supply of Oil and Petroleum Products to South Africa and also Tanzanian ambassador to the UN, admits that ``there has been an erosion of sanctions over the past year.'' But he says the UN will not drop the oil or other sanctions until the political changes in South Africa are ``profound and irreversible.''
Neighbors eager to sell
But many African countries - such as Angola, Gabon, Ivory Coast, and Nigeria - are reportedly keen on selling oil to South Africa. Government oil officials from South Africa and Angola have been meeting regularly since last September with oil sales high on the agenda. Angolan oil minister Zefferino Costa Iombo said there was an ``indisputable logic to oil links'' between the two countries, though no deal has become public.
South African oil-refining capacity is thought to be around 450,000 b.p.d. Surplus refined products are re-exported to countries within the South African customs union - Botswana, Namibia, Lesotho, and Swaziland - and further sales also go to Zambia and Zimbabwe.
When the UN imposed a trade embargo on Iraq on Aug. 6 last year, some African countries that had been receiving Iraqi or Kuwaiti crude on easy terms were suddenly forced to find a supplier elsewhere. So they turned to their supplier of last resort - South Africa - a fact acknowledged by Pretoria oil officials at the time.
``Our supply and demand is pretty much in balance right now, so we don't have much excess capacity to re-export,'' Van Zyl says, adding that all the nation's refineries are being expanded.
Engen, the energy subsidiary of mining and finance conglomerate Gencor, also announced it was seeking to expand into oil exploration and refining in West African countries such as Namibia, The Congo, Gabon, and Angola, the same countries with which the government has been talking about oil supplies.
Meanwhile, United States and European oil companies are queuing up to explore for oil in South Africa, after Soekor - the state exploration company - announced last year that the whole country was open for oil exploration.
US firms consider exploration
That such investment is counter to 1986 US anti-apartheid legislation is no problem, says a London executive for an independent US oil producer. ``My company in no circumstances will break US law, but the oil majors can afford to think differently and seek out all available chances. They deal with South Africa through their Canadian or European subsidiaries.'' In 1986, US oil companies used the same tactic to counter US State Department pressure to quit their investments in Syria.
The Shipping Research Bureau says that since 1979 South Africa has had to pay between $2 billion and $2.4 billion on top of its annual oil bill of between $1.3 billion and $3.8 billion to overcome the effects of the UN embargo. But financial - not oil - sanctions are the real cause of its economic problems.
``South Africa is denied access to the world's capital markets and whatever is accumulated on top of its current account goes to pay its $20 billion foreign debt,'' says Michael Spriggs at London stockbrokers Warburg Securities.