South Africa eyes new refinery to process Iran’s oil

South Africa is considering building an oil refinery to process new volumes of Iranian crude, a government official told news agency Reuters this week.

Plans for the new refinery are being conceptualized, according to Tseliso Maqubela, the deputy director general for petroleum and petroleum products regulation at the nation's energy ministry.

He did not estimate the cost nor the timing of construction.

Before nuclear sanctions in recent years, Iran was the biggest oil supplier to South Africa, importing about 380,000 bpd. South Africa has said it will resume oil imports from Iran if and when sanctions are lifted.

However, without its own refinery, South Africa would have to rely on foreign oil companies who own refineries there.

"There are benefits to owning a refinery, basically the profits are re-invested in the country and outflows can be controlled," said Maqubela.

"But most importantly you are able to protect your own sovereignty," he added. "We could not bring Iranian crude oil during the sanctions, even though the US gave us an exception, because we did not have a facility where the crude could be refined."

Refineries in South Africa were initially designed to refine Iranian crude, but they were refitted after the sanctions to process other types of crude.

"We believe it's better to have a technology partner, a partner who will bring the financing and then a partner that can bring crude oil,' the official told Reuters.

Maqubela said South Africa was considering using a refinery planned, but not yet built, by state-run PetroSA in the industrial port of Coega. However, the eventual refinery may take another form and name or be located in a different region, he added.

South Africa's blueprint for growth and development, launched in 2012, gives the government until 2017 to develop new refinery plans to cope with rising domestic demand for fuel.