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Tehran, Pretoria Poised to Sign Oil, Energy MoU

Tehran, Pretoria Poised to Sign Oil, Energy MoUTehran, Pretoria Poised to Sign Oil, Energy MoU

Oil Minister Bijan Namdar Zanganeh hoped Iran and South Africa will sign a memorandum of understanding on oil and energy trade when the two countries' presidents meet in Tehran on Sunday.

"The biggest issue is price … and we will only settle on a competitive price," Zanganeh said on resuming oil exports to South Africa after meeting the country's Energy Minister Tina Joemat-Pettersson on Saturday.

He described Pretoria as one of the important customers of Iran's crude before sanctions against the Middle East country were intensified in 2012.

Iran was once South Africa's biggest oil supplier, but sanctions curbed exports and forced Pretoria to look elsewhere to meet its fuel demand. Iran used to export nearly 68,000 barrels a day to the continent’s second-biggest crude consumer with 380,000 bpd demand.

But the meeting was essentially short on substance and more about improving bilateral rapport.

"Iran's situation is different from the past now that sanctions against it are lifted," Zanganeh said. "The meeting is a good buildup to the meeting between the presidents of the two countries [on Sunday]."

Joemat-Pettersson is part of a South African delegation that landed in Tehran on Saturday ahead of President Jacob Zuma's arrival later in the day.

Zuma, who is heading a 180-member politico-economic delegation, is scheduled to be officially received by his Iranian counterpart Hassan Rouhani on Sunday.

Iran and six world powers reached a landmark deal in July 2015 to place temporary limits on Tehran's nuclear program in exchange for lifting most western sanctions.

The deal, which took effect in January, has enabled Iran to resume dialogue and trade with the outside world without the burden of sanctions.

------- Refinery Plans

In a move to further bind the two countries' energy trade, Iran is planning to build an oil refinery in South Africa or buy stocks in an existing refinery there.

The plan is aimed at securing a new market for Iran's crude in a world grappling with low prices, stiff competition and supply glut. South African refineries were designed to process heavy grades of oil such as Iran's crude, but were refitted to process lighter blends after the sanctions.

Iran's crude production reduced to only 1 million barrels during the sanctions, but the country says it will reach its pre-sanctions output level of 4 million barrels in June.

Oil talks with Africa's most industrialized economy rekindled shortly after the nuclear accord was finalized last year, with South Africa being one of the first countries to openly express interest in Iran's supplies.

In a statement in December, South Africa's Deputy Foreign Minister Nomaindiya Mfeketo said his country was ready to resume oil trade with Iran the day after sanctions against it were dropped.

But the two sides are still discussing terms more than three months after the implementation of the nuclear deal.

Financialtribune.com