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SA is pursuing an oil deal with South Sudan to manage fluctuating oil prices, Energy Minister Jeff Radebe said at a media briefing on Thursday in Cape Town.
The minister was responding to a weekend report in the Sunday Times that stated the energy department was looking to build an oil refinery in South Sudan, a "mystery" deal which could cost $1bn. According to the article, government has already spent R20m in pursuit of the deal, which "raised eyebrows in government circles".
At the briefing on Thursday, Radebe first slammed allegations that the deal was shrouded in mystery, saying they amounted to a ploy to score political points ahead of elections.
"We believe the information is malicious and is intended to distract us from what is important, and to sour our relationship with our South Sudanese counterparts," he said.
Radebe said the Central Energy Fund's (CEF) board had distanced itself from the "grossly misleading information". He then confirmed that SA is pursuing an oil deal in South Sudan.
The minister said he had been engaging with counterparts on the African continent, including Nigeria, Equatorial Guinea and South Sudan, to mitigate future challenges linked to oil prices.
Above board
He said that in September 2018, he told the National Assembly that SA would need to look to oil-producing countries on the continent in order to address the need to access crude oil, ensure self-sufficiency and mitigate fluctuating fuel prices.
Part of the strategy includes drilling for oil locally off the coast of Mossel Bay, relying on shale gas in the Karoo, and sourcing oil from South Sudan.
South Sudan had invited SA to consider participating in the country's oil and gas sector, said Radebe, and to pursue this, a government-to-government agreement is required.
Radebe said he had received due authorisation from the presidency and the department of international relations and cooperation to sign a memorandum of understanding between the two countries.
The agreement supports a joint investment project to help landlocked South Sudan to find an export route to markets like SA, and the east African region.
Radebe said Treasury was also aware of the development of the project.
The signing of the government-to-government agreement was widely publicised in November 2018, Radebe added.
Radebe said allegations levelled against him in the Sunday Times report were an attempt to derail a clean-up process at the CEF. Earlier this month, Radebe removed CEF chairperson Luvo Makasi on allegations of corruption.
True cost
Radebe said the project required "key critical" skills, and members of the team of experts listed in the Sunday Times article were all employees of the CEF. "They are not an additional financial burden to the group," he said. Six experts are assigned to the South Sudan project.
Radebe said that feasibility assessments of the projects are still underway, which means that it does not require approval from Cabinet or Treasury yet.
The Sunday Times reported that R20m was spent on the deal so far, which includes travel costs.
To this, Radebe responded that government had spent "no more than R2.2m" and this includes personnel costs and travel. "The basis and source of the R20m mentioned in the Sunday Times is misleading," Radebe said.
Radebe also said the $1bn cost of the project is an indicative figure, and will be spread over 10 years.
Because feasibility studies are still underway, it would be "premature" to say how it would be funded, he added.
