Energy Minister Jeff Radebe on Thursday rebuffed criticism against an oil deal with South Sudan, saying South Africa must do what was right to meet its energy needs.
“South Africa is a net importer of crude oil and it has always been our strategy to source oil and gas for our domestic use, both internationally and where possible within our own territory,” the minister said.
He was responding to a report in Sunday Times newspaper last week which exposed “a dodgy oil deal” worth 1 billion U.S. dollars with South Sudan, which claimed that Radebe’s team “splurges millions in pursuit of energy venture in South Sudan”.
“In all my pronouncements, including those to Parliament, on the issue of high oil prices, I have been transparent on the department’s engagements with my counterparts on the continent,” Radebe said.
This is to bolster South Africa’s position with regard to access to crude oil, to ensure self-sufficiency as well as to find ways of mitigating fuel price fluctuations in the long term, he said.
“As government, we would want to get to a situation in which the prices of fuel compare favourably with those of oil producing countries,” said Radebe.
“South Africa’s involvement in various parts of the continent including South Sudan is informed by this strategy,” he said.
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 of natural gas in its estimated reserves.
The country’s reserves are ranked third largest on the African continent after Nigeria and Angola.
As a land-locked country, South Sudan is dependent on a pipeline passing through Sudan so as to get its oil to the market. The project incurs significant logistical costs. It is envisaged that a joint investment project will assist South Sudan in finding an additional export route and in turn, bring strategic oil reserves to other markets including South Africa.
Toward the end of 2018, South Sudan invited South Africa to consider participation in the oil and gas sector in that country, according to Radebe.
Such participation can only be done through a government-to-government agreement, Radebe said, adding that in the conclusion of a memorandum of understanding (MOU) between the two countries, all the constitutional and legal processes undertaken have to involve the Department of International Relations and Cooperation and the Presidency.
“The Presidential Minute empowering the minister of energy to sign the MOU on behalf of the South African government was duly authorized; without this, an MOU can never be concluded,” Radebe explained.
The stated 1 billion dollars is the estimated cost of the full project, including the oil block, pipeline and refinery, which will be spread over a period of 10 years, he said.
A project of this magnitude passes through various phases of approval and execution, he said.
Radebe said the Department of Energy and its entities were open to honest and transparent engagements on this and other energy matters.
“This is important in ensuring that we take the country along with us as we continue to deliver on the government’s broader national energy imperatives,” he said. Enditem