South Africa

Deal struck to reverse 'unlawful' 2015 sale of SA crude oil reserves

Deal struck to reverse 'unlawful' 2015 sale of SA crude oil reserves

The Strategic Fuel Fund (SFF) and global resources giant Glencore have reached an “in-principle” agreement to reverse the controversial sale of SA's strategic crude oil reserves in 2015.

“Glencore, which bought three-million barrels of oil, agreed that the sale was invalid. As part of this agreement, SFF would refund Glencore the money paid to SFF,” the Central Energy Fund (CEF) said on Thursday.

The SFF is a subsidiary of the CEF.

The Sunday Times reported at the weekend that the crude — a reserve maintained in case of emergencies brought about by disruption in global oil markets — was sold at a discounted price of $28 per barrel. At the time, the market rate was about $38 and it was sold under the pretext that it was stock rotation.

The deal was halted in mid-2016.

The fund had taken the matter to the high court in the Western Cape to seek a declaratory order setting aside the sale of the country's strategic crude oil reserves. The case is under way.

“The SFF argues that its former acting CEO Mr Sibusiso Gamede unlawfully concluded a series of agreements which resulted in the disposal of SA’s 10-million barrels of strategic crude oil reserves,” the statement said.

According to the CEF, the oil reserves were sold without any proper mechanism being put in place for “rotation” or for the SFF to repurchase the oil reserves should there be a pressing crisis of energy supply in SA.

“The SFF is committed to taking the necessary actions to ensure that the ownership of the reserves and the development of the energy sector remains in the hands of the country for the benefit of South Africans,” said the SFF.

“We are happy that Glencore has agreed to return to SA what belongs to the country and our fate now remains in the judge’s hands.”