Botswana Oil, PetroSA ink cooperation deal
Staff Writer | Wednesday December 18, 2013 15:26
The deal is the first of a number of agreements that the parastatal expects to strike with its regional counterparts to increase fuel supplies into Botswana through alternative sources and routes.
According to Botswana Oil, the cooperation with its South Africa peer will enable the two to also jointly explore upstream and downstream hydrocarbon opportunities apart from ensuring security of petroleum supplies for their respective countries.
“With the provision of adequate energy being a prerequisite for socio economic development, Botswana Oil Limited is delighted that a Cooperation Agreement with PetroSA has finally been signed. Despite the two national oil companies being affected by the volatile fuel prices, due to international market forces, we are committed in total, to ensuring security of supply for both our countries, as exemplified by signing of the cooperation agreement between our two national oil companies,” said Botswana Oil CEO Willie Mokgatlhe in an interview.
Priority areas will cover evaluation of opportunities in the hydrocarbons upstream and downstream activities including but not limited to coal to Liquids, cooperation in joint procurement of petroleum products and Provision of technical expertise and capacity
“The deal, which would enable greater synergies and preparedness, would also see PetroSA assisting to enhance the capacity of its Botswana-based counterpart’s depot and terminal operations, international oil supply and trading operations, and oil installations and maintenance.
“The cooperation agreement was part of the strategy to forge strategic relationships with partners across Southern Africa and the world,” PetroSA said in a statement. Botswana Oil is also looking to sign similar agreements with its peers in Namibia and Mozambique in an effort to boost stability of local fuel supply.
State-owned PetroSA has cooperation agreements with Mozambique’s PetroMoc, the Democratic Republic of Congo’s Cohydro Sarl, Italy’s ENI, and the Korea National Oil Corporation, among others.
Mokgatlhe added that joint committees formed under the agreement will meet regularly in an effort to fully realize the objectives as set out in the partenership.
First mooted in 2010, Botswana Oil became operational in July this year with the appointment of its founding CEO Willie Mokgatlhe, who was formerly Shell Botswana’s country chairman.
Mokgatlhe recently told Mmegi Business that one of Botswana Oil’s leading strategic priorities is to increase fuel supplies into Botswana through alternative sources and routes.
In previous years, efforts in this direction have been slowed somewhat by the lack of a state oil company in Botswana, as some regional countries have asked for utility to utility agreements to complement bilateral Memorandums of Understanding (MoU).
In addition to engagements with local companies active in the road and rail transportation of oil products into the country, Botswana Oil has made contacts with Transnet pipelines, a government-owned company that owns the backbone pipeline infrastructure in South Africa, including the Durban-Johannesburg pipeline which transports the majority of petroleum products consumed in Botswana.
The local economy consumes more than one billion litres of fuel annually, with about only 4.3 percent coming through sources other than South Africa. Of the supplies coming through South Africa, nearly all are routed through the Durban-Johannesburg pipeline.
This over-reliance has been exposed numerous times in recent years, with events such as labour strikes and sharp pipeline cost increases wrecking havoc on the Botswana economy.
About 60 percent of fuel from South Africa is sourced via road, with the balance being imported by rail.
Besides ensuring security of fuel supplies to Botswana and management of government’s strategic fuel reserves, the new oil company is tasked with facilitating meaningful participation of citizens in the petroleum sector, including shareholding.
Botswana Oil was established under the Companies Act with government as the sole shareholder.