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Oil deal for SD

12/01/2012 00:00:00 MAQHAWE NXUMALO

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MBABANE –Swaziland is set to acquire crude oil from Equatorial Guinea, the Times can reveal.

The visiting President of Equatorial Guinea, Obiang Nguema Mbasogo is here to seal that deal among other bilateral talks he will be having.

Once-refined and separated crude oil can be utilised in a number of consumer products such as petrol, kerosene, asphalt and chemical reagents used to make plastics and pharmaceuticals.

The agreement between the two countries on crude oil was supposed to be signed last night, and is separate from all the other bilateral agreements which will be signed this afternoon. According to the Minister of Natural Resources and Energy, Princess Tsandzile, the separate signing ceremony was necessitated by the fact that her Equatorial Guinean counterpart would leave the country before today’s ceremony.

According to online sources, oil reserves were discovered in 1996 in Equatorial Guinea.

Figures compiled in 2010 by the CIA fact-book state that Equatorial Guinea produces 322 700 barrels of oil per day, making that country the 36th largest producer of crude oil in the world. In an interview yesterday, the Principal Secretary in the Ministry of Natural Resources and Energy, Thembinkosi Mamba, said the nation should expect to see activity on this deal after six months. Mamba said government will purchase the crude oil from Equatorial Guinea and then it will be transported to South Africa, where it will be refined before it is brought into the country as fuel.

"This presents the first time that Swaziland has ever had such an agreement where we buy crude oil and refine it ourselves," Mamba said.

He said he believes that Swaziland is getting a good deal from the Equatorial Guineans.

Mamba said government has plans to build its own refinery so that, in future, the crude oil will be brought directly to the country for refinement and separation, thereby, cutting down on costs.

Minister Princess Tsandzile also pointed out that the deal between the two countries would not only be limited to crude oil but would include other aspects of energy, including electricity supply.

Deal will cushion fuel prices but...

MBABANE – In the long term, the acquisition of crude oil straight from the source will cushion the country against the fluctuating fuel prices that have been experienced in recent years.

The country’s deal to purchase crude oil from Equatorial Guinea will not necessarily translate into cheaper fuel for local motorists.

The Principal Secretary in the Ministry of Natural Resources and Energy, Thembinkosi Mamba, said it was still too early to determine whether fuel will now be cheaper with the advent of the agreement with the Equatorial Guineans. "There are costs involved in the acquisition of the oil, like the cost of transporting it to South Africa where it will be refined, and the charges that we will have to pay for refining it in that country," Mamba said. He said whether fuel becomes cheaper or not will be determined by the costs which will be incurred by government in its production.

He said government has not ruled out the possibility of selling the crude oil to other countries if it has an excess supply.

Consumer Association gives deal thumbs up, thanks King

MBABANE – The Consumer Association believes that the crude oil deal between Swaziland and Equatorial Guinea will lead to stable, if not cheaper, prices of commodities.

The Chairman of the National Consumer Association of Swaziland, Bongani Mdluli, thanked His Majesty King Mswati III and his government for clinching such a deal with the oil-rich West Central African country. Mdluli said the prospect of cheaper fuel would mean that most other commodities would also be cheaper as most enterprises factor-in the cost of fuel in the charges that they pass on to the consumer.

"Such an agreement has far-reaching positives as it will stabilise the country in numerous ways. As we speak, Nigeria is in turmoil because of fuel prices," Mdluli said.

Mdluli also said it would be a good idea for government to hasten the construction of refineries locally as this would lead to the creation of jobs for Swazis and it would also mean that the expense of refining the oil in South Africa would be eliminated.

Fuel Retailers Association over the moon

MBABANE - The Swaziland Fuel Retailers Association is excited at the prospect of the country acquiring crude oil for refinement into fuel.

The Chairman of the Association, Harry Nxumalo, said the news of the agreement between Swaziland and Equatorial Guinea can only be viewed as a positive by players in the industry. "This can only work if we are assured of continuous supply of the crude oil and, hopefully, the cost will not be going up," Nxumalo said.

THE PRESIDENT’S DIARY TODAY
9am – Depart for Ngwenya Glass Factory
11:30am – Arrival at Lozitha Royal Residence
11:45am to 12:45pm – Private discussion with His Majesty King Mswati III
12:50pm to 1pm – Signing ceremony, press conference/press statements
1:45pm – Bidding farewell to His Majesty King Mswati III, depart for airport, departure ceremonies, take off.
Comments

Good people, the assertion that the oil deal will make oil prices stable is misleading to the nation. Refining oil has got nothing to do with stable or cheaper prices as anticipated by the Consumer Association Chairman. Unless Mr. Mdluli is telling the nation that government is going to subsidize the fuel prices, otherwise this deal is not going to change the state of affairs in as far as fuel prices are concerned. Oil prices are mainly detetermined by the supply side of the transaction. The only benefit that may accrue to us as a nation would job creation. Forget about stable or cheaper prices Mr. Mdluli.
Jan 12, 2012, 9:05 AM, Economist

Swazis should not rejoice at this, since it may not at all happen.This is just one of governments ploy to make as if they are doing something to improve the country's economy yet there is nothing. Firstly, where is Swaziland going to get the money to build an oil refinery? Secondly all oil dealings are governed by the rules of OPEC, and just because a country refines oil, it cannot reduce fuel prices. Swaziland is just too small a country to embark on such a venture, and investing in such would see billions if not trillions of the country's money going down the drain. I bet you,there is absolutely nothing will take off after the six months stipulated.All will remain in paper.....Empty useless promises!!!
Jan 12, 2012, 9:05 AM, majobo (kmajobo@yahoo.com)

Yesterday I commented that the visit may be poorly planned unless there are positive spin offs that outweigh the cost - and Bravo these are there! Congratulations to His Majesty the Kind and His Majesty's Cabinet - hosting the President is indeed a justifiable cost!
Jan 12, 2012, 9:05 AM, Celucolo (sprocardo@yahoo.com)I

I may not be an economist or anything but I think this deal will not help us at all. Unless government is saying he will buy the crude oil, process it then sell it to the nation at a subsidised price which I don't see happening as it won't be economically viable to do so. The issue of job opportunities does not apply to the country. Remember that oil production require highly skilled personnel in that field which as a country we don't have. As one writer noted, there are standards that need to be met before a country produces oil. Mr editor I don't think this deal will help us in any way
Jan 12, 2012, 11:20 AM, sibusiso maziya (sbera276@gmail.com)

I agree with the Majobo and The Economist, this is just to show how ignorant how people are on how the oil industry works. Nothing will happen, its all on paper. Firstly when does Swaziland have a right to determine oil prices? Basically this whole so called deal is a smoke screen, taking desperate Swazis for a ride. This country must use its only resource it has which is soil, do farming, feed the country if there is a surplus export. That would be a start. Im also disappointed at the oil/petrol retailers, clearly they are not informed about how the industry works. Dressler
Jan 12, 2012, 11:20 AM, Dressler (dressler@yahoo.co.uk)

I know it will take ages for SD to achieve this, it is just a campaign strategy for the current cabinet to be reinstated in 2013.They will want to be re-elected to finish the deal for the next 15 years.
Jan 12, 2012, 12:07 PM, Barry (barryhlophe@gmail.com)

Mxm, there is nothing amusing about this deal,its not a deal for the general Swazi. Practically,it will be "Royal crude oil" after all,that is if u get what I mean.So where do you and me feature in this equation?Stop fooling yourselves...anyway we were told longtime ago" never to question anything on these deals because we are not there when they are negotiated or sealed'. Who are we anyway? Only in Swaziland are the people afraid of their gvt and leadership,in normal countries with normal govts,the gvts fear the people.The least the better.
Jan 12, 2012, 2:54 PM, Mduyaye (mduyaye@702mail.co.za)