If need be, SA should consider importing crude oil from Russia at less than the high price prevailing on the global market, mineral resources and energy minister Gwede Mantashe said in the National Assembly on Wednesday.
His proposal comes as the EU has decided to reduce its reliance on Russian oil over time and as Russia faces a range of embargoes and sanctions because of its war on Ukraine.
SA has maintained a neutral stance on the war, refusing to condemn Russia and insisting that the only way to resolve the conflict is through negotiation.
The minister made his remarks after a debate on high fuel prices when opposition parties called for a scrapping of fuel levies to reduce the price of petrol which they said was harming the poor by increasing the price of items such as food and transport.
Mantashe told Bloomberg that buying oil from Russia to mitigate steep fuel prices was “an idea” but a purchase was far from finalised. It would first have to go through a complex government procurement process. “Russian oil is not on the sanctions list.”
To alleviate the petrol price crisis, Mantashe and finance minister Enoch Godongwana extended the temporary reduction of R1,50 per litre in the general fuel levy — intended for April and May — from June 1 until July 6 and then to adjust it to 75c until August 2. Without this relief the petrol price would have increased to well above R25 a litre in June.
SA does not import crude oil from Russia. Most of its oil imports are from Nigeria and Saudi Arabia. Mantashe said it has increased procurements from the African continent to increase intra-African trade.
Earlier this month, the EU decided on a sixth package of sanctions against Russia, including a partial ban on oil imports. The decision was to ban seaborne imports of Russian crude oil from December 5 2022 and ban petroleum product imports from February 5 2023. The US banned Russian oil imports and the UK said it will phase them out by year-end.
Mantashe said the only sustainable solution to the energy crisis in SA was for the conflict between Russia and Ukraine to end. The war had seen a sharp increase in crude oil and petroleum product prices in the past five months.
“Sanctions by the USA and the EU on Russian oil and petroleum products have resulted in a big imbalance in the demand and supply prompting high fuel prices,” he said. “The use of energy as an economic weapon affects developing countries disproportionately. We pay a higher price than the developed countries.
“To cut off the Russian Federation from global petroleum supply — a country that accounts for 11% of global supply — exposes developing countries to unaffordable price increases. Our economies are laid bare to imported inflation and high interest rates that could ultimately cause recession throughout the world economies, adversely affecting developing countries and undeveloped ones.
“Imbalance in petroleum product supply may also lead to fuel shortages as Europe competes for alternatives. This bleak outlook extends to the emergence of China from lockdown which will significantly increase the price of crude oil. African airlines are already experiencing difficulties which they will not survive if the situation is sustained beyond six months.” Mantashe stressed that he was not referring here to SA.
“Western countries should be reminded that the economic war that they have unleashed disproportionately impacts SA and countries like ours.” He pointed a finger at Nato for “squeezing” Russia, apparently supporting the view that Nato membership of Russia’s neighbours, and Ukraine's application to join Nato, forced Russia to invade Ukraine.
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