SA looks to buy Iraqi crude to boost supply security

Cape Town - South Africa's Strategic Fuel Fund (SFF) is seeking to import 24 million barrels of oil a year from Iraq to boost its reserves in what would be South Africa's first crude imports from Baghdad for more than a decade, an official said on Friday.

South Africa has not imported crude oil from Iraq since 2003, when Saddam Hussein was toppled.

"As part of security of supply, SFF applied for an allocation with the Iraqi state-owned oil company SOMO and we are waiting for SOMO to respond," SFF's acting chief executive officer, Sibusiso Gamede said.

"We are looking at two million (barrels) per month, adding up to 24 million (barrels) a year," he told Reuters.

According to a senior Iraqi diplomat based in Pretoria, South Africa had been looking for significantly more, although analysts were sceptical over the amounts mentioned.

"The request is with our state oil company SOMO, they have sent us messages to say the request has been approved in principle," the diplomat said.

The Iraqi diplomat said SOMO was also deciding on two separate requests from private companies for a total of 24 million barrels of oil a year, which will be used to supply refineries in South Africa and the SADC region.

All crude purchase requests are processed through Iraq's state oil marketing firm SOMO, which did not respond to questions from Reuters.

In August, South Africa's largest black-owned petrochemical company WASSA confirmed that it had applied for Iraqi crude.

"We applied for the Iraqi allocation. We are yet to get confirmation of the allocation," chief executive Nokwanele Qondo said. No details of actual amounts were provided.

South Africa has been diversifying its crude sources after the European Union and the United States imposed sanctions on Iran, its former top supplier.

Pretoria has said it would resume oil imports from Tehran "tomorrow" if sanctions were lifted.

According to a study by the Human Sciences Research Council (HSRC), Iraq was one of South Africa's six top suppliers of oil after 1994, when the African National Congress came to power.

Iraq's southern oil exports will rise modestly to around 3.25 million barrels per day in 2016, the head of state-owned South Oil Company said last month, as the country struggles to boost production in the face of slumping crude prices.