NIOC in Talks to Supply S. African Refineries

NIOC in Talks to Supply S. African RefineriesNIOC in Talks to Supply S. African Refineries

Serious negotiations are underway with Royal Dutch Shell to resume selling crude to the Anglo-Dutch multinational oil and gas company and upon reaching an agreement, Iran will provide a part of the much-needed oil for Shell refineries in South Africa.

“No contract has been signed yet, as there are still disagreements to be resolved,” Seyyed Mohsen Qamsari, director of international affairs at National Iranian Oil Company, told Mehr News Agency on Wednesday.

Asked about the volume of oil to be purchased by Shell, Qamsari said, "It is still being negotiated. Nonetheless, it is predicted that we can export as many barrels as we did in the pre-sanctions era that stood at 100,000 barrels per day."

Noting the fact that oil giants hold the lion's share of stakes in African refineries, the official said talks have been held with British Petroleum, Shell and Petroliam Nasional Berhad to export oil to South Africa.

"In case Iran finalizes an agreement with Shell, the Persian Gulf country will supply a part of the much-needed crude to Shell's refining complexes in South Africa," he said.

Asked about selling oil to American refineries in South Africa, including Chevron Corporation, Rokneddin Javadi, the head of NIOC, had already clarified that based on Iran's policies there is no legal constraints in this regard.

"We want to produce 4.7 million bpd of oil in the sixth five-year development plan (2016-21)," Javadi said. "To do so, we must raise daily output by 700,000 barrels."

He added that oil export capacity will rise by 1 million bpd if the country ramps up production by 2-2.2 million barrels over the next 12 months. Javadi noted that Iran is committed to winning back the market share it ceded to rival producers in the 13-member Organization of Petroleum Exporting Countries.

"South Africa has been one of Iran's traditional customers and imported 380,000 barrels per day from Iran prior to sanctions," he said. According to Thembisile C. Majola, South Africa's deputy energy minister, a majority of her country's refineries are run by famous oil giants such as BP, Total and Chevron, which can start buying crude from Iran should South Africa's Energy Minister Tina Joemat-Pettersson negotiate with them.

On the prospect of collaboration with Shell, Ali Asghar Hendi, the head of a department for settling Oil Ministry’s oil dues, had announced that Shell’s debt to Iran has been cleared and negotiations are underway to receive the rest of the blocked oil revenues.  At the end of 2014, Shell owed Iran $2.1 billion. Iranian officials said in March that Shell had cleared its outstanding debt by making a €1.77 billion ($1.9 billion) payment to the state-run National Iranian Oil Company.

“Under the present circumstances, around 35% of Iran’s total oil exports go to European markets,” Qamsari said.

“On the whole, Iran has set records in oil sales to European countries in the post-sanctions period.”

Referring to the signing of new oil contracts with European customers, the official noted that oil export to Greece began earlier last week. Based on a recent statement by Oil Minister Bijan Namdar Zanganeh, Iran’s current oil exports amount to 1.7-1.75 million barrels. Hence, taking into account Europe’s 35% share in Iran’s crude exports, more than 500,000 barrels are exported daily to the green continent.