South Africa, Africa’s biggest economy, receives a quarter of its crude from Iran. Now the country’s energy department is working on a ‘worst case scenario’ where oil imports could be halted due to international sanctions imposed on Iran.
The European Union banned imports of oil from Iran and imposed a number of other economic sanctions on 23 January, joining the United States in new measures.
South Africa would be hard-pressed to fill any gap quickly. Only Turkey and Sri Lanka rely more heavily on Iran for oil. According to Nelisiwe Magubane, director general of South Africa’s department of energy, most South African refineries are designed to treat Iranian crude and that any adjustment to handle other crudes would be costly. Those costs, in turn, would have to be passed on to South African consumers.
US Deputy Secretary of Energy Daniel Poneman said during his visit to South Africa that Washington had been in talks with all oil importers to find alternatives to Iranian supply and would work to avoid any price shocks.
South Africa and Iran also have significant investment links. MTN Group, Africa’s biggest telecoms company, is a major player in Iran, where it has over 32 million subscribers and makes nearly 10 per cent of its revenue.
South African petrochemicals group Sasol said in November it had entered talks to potentially divest its operations in Iran.