As the petrol price is set to increase by 93 cents a litre on Wednesday, it’s been revealed that South Africa imported no crude oil from Iran last month, traditionally one of our biggest suppliers.

On Friday, the government said the reasons behind the astronomical petrol price hike were as a result of a weakened rand exchange rate against the dollar, and a decision by the minister of energy to increase the retail margin on all grades of petrol by 3,5 cents per litre.

However, Iran has faced increasing EU and US sanctions over its nuclear programme, leading to many countries boycotting the purchase of crude oil from the Middle Eastern nation.

An interesting article in the Sunday Times yesterday paints the picture of a changing crude oil supply chain, which may also be adding to the new price we’ll be paying for petrol from Wednesday.

Probably the most interesting statistic to come out of the article was the fact that a year ago, we were importing 42% of our crude oil from Iran.

This is the changing face of South Africa’s crude oil supply chain:

SA imported crude oil worth R9.4-billion in July, with Saudi Arabia providing oil worth nearly R6-billion. Angola and Nigeria were the other main suppliers, trade statistics from the South African Revenue Service (SARS) show.

In the same month last year, SA bought about 42% of its crude from Iran, paying the country nearly R4 billion. Saudi imports jumped 524% from July last year, while imports from Nigeria increased 106% and Angola by 14%, according to SARS data.

Engen, which traditionally used about 80% Iranian crude at its refinery in Durban, said it is “doing very well on its new diet of crude” after suspending Iranian imports early in April. While the Department of Energy had warned that it would cost R300 million to convert its refinery to adapt to other sources of oil, only “minor changes” were made, spokeswoman Tania Landsberg said.

She declined to say where Engen is currently buying crude from to replace its Iranian supply. The 135 000 barrels-a-day refinery is currently running at more than 70% capacity.

Iran has repainted, renamed and reflagged more than half of its fleet of supertankers, used to carry about two million barrels of oil each, over the past three months as it tries to circumvent the US and EU sanctions, according to the Financial Times.

Other ways to avoid the sanctions include transshipments, or the transfer of a shipment from one vessel to another while in transit.

“On the issue of transshipments, SARS’s understanding is that such cargo is not covered by insurance; essentially then it increases the cost and the risk to the buyer. Due to the monitoring of fund flows to Iran because of the international embargo it would be extremely difficult for a South African company to effect payments to Iran. Other countries would be reluctant to use their country name as supplier for Iranian oil due to the huge financial and political risk,” spokesman Adrian Lackay said.

US president Barack Obama signed a law in December that denies foreign banks that do business with the Iranian central bank access to the US financial system. The EU stopped Iranian oil imports from July 1 to increase pressure on the country to abandon its nuclear programme. Iran is insisting that the programme is for civilian energy and medical research purposes.

[Source: Business Day]