South Africa's Energy Minister Jeff Radebe announced that South Africa is negotiating an oil deal with South Sudan. South Africa plans to build a $1 billion refinery in South Sudan.
According to the Radebe, the negotiations were not exclusive since Cape Town is also securing deals in oil with other countries like Nigeria and Equatoria Guinea to reduce its exposure to the highly volatile oil prices.
South Africa is known to be highly reliant on imported crude oil. Recently, French Total announced that they discovered they found oil in shores of South Africa that contains as much as 1 billion barrels in total resources.
Total's CEO Patrick Pouyanne said that it is gas condensate and light oil, mainly gas. He also said that there are four other prospects on the license that they have to drill; it could be around 1 billion barrels of total resources of gas and condensate.
During the time of the discovery, South Sudan is eager to increase its oil production after years of civil war that has stopped its production. The country owns the most oil reserves in South Africa. The country produces 350, 000 barrels per day of crude before the civil war started. It currently produces an average of 180, 000 barrels per day. The construction of the refinery is expected to boost the production of the country to 270, 000 barrels per day or it might restore its production to its pre-war production level. The country's oil reserve is estimated at 3.5 billion barrels as of 2016.
The report of the refinery deal with South Africa was reported earlier this year. The report said that Cape Town had already invested $1.4 million on the refinery project. The lawmakers in Africa criticized the Radebe and the government after dealing in a secretive way. Radebe dismissed the criticisms against the deal saying that all was "above board" in South Africa's oil and gas negotiations with South Sudan.
According to Radebe, the country is landlocked and to get its oil to the market it is dependent on a pipeline passing through Sudan and incurs significant logistical costs. He also said that it is envisaged that a joint investment project will assist South Sudan in finding an additional export route and in turn bring strategic oil reserves to other markets including SA South Africa.
Radebe also said that he was empowered by President Cyril Ramaphosa to sign a government to government memorandum of understanding with South Sudan.
