Johannesburg - South Africa defended the sale of 10 million barrels of crude oil from its strategic reserves at below market prices in December, saying on Thursday it still had reserves for 90 days.
The state-run Strategic Fuel Fund (SFF) sold 10 million barrels of crude at $28 a barrel to a unit of Glencore, Vitol and Taleveras, Tseliso Maqubela, a director in the Central Energy Fund (CEF) said on Thursday.
The CEF said that South Africa had access to 90 days worth of oil reserves, dismissing a local newspaper report that the country's strategic reserves had been drained to 300 000 barrels, less than a day's cover.
Oil consumption in Africa's most advanced economy is around 400 000 barrels per day.
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Maqubela told Reuters that the condition of the sale was that the oil would not be exported and so the government considered it to be part of its strategic reserve stockpile.
Maqubela said there were about 40 million barrels in storage at South Africa's reserve facilities in Saldanha Bay north of Cape Town and although it was in private hands, the government considered it to be part of its strategic stockpile.
“Should anything go wrong globally, we can access that oil at market prices. We may not own that crude oil but we have access to it at any given time,” he said.
He said that even if 30 million barrels was exported, the 10 million that cannot be exported would give South Africa more than 20 days' cover, which is the minimum required by the government.
The oil was sold below market prices because it was deteriorating in quality, Maqubela said. Brent crude prices in December, the month of the sale, ranged between $35.98 a barrel and $44.82, Thomson Reuters' data shows.
The Business Day newspaper reported on Thursday that the sale of the 10 million barrels had left South Africa with only 300 000 barrels and had been done without the required approval of the National Treasury.
But the CEF said in its statement that “no approval is required from the Minister of Finance to sell or rotate strategic fuel stocks.”
A spokeswoman for the Treasury declined to comment.
REUTERS