Business 13.7.2018 03:23 pm

Ramaphosa goes straight to the oil taps to bring down fuel prices

President Cyril Ramaphosa arriving at the Royal Court in Jeddah, for the Welcome Ceremony during his State Visit to the Kingdom of Saudi Arabia, 12 July 2018. Picture: GCIS

President Cyril Ramaphosa arriving at the Royal Court in Jeddah, for the Welcome Ceremony during his State Visit to the Kingdom of Saudi Arabia, 12 July 2018. Picture: GCIS

Whether the leaders of the world’s top oil-producing countries are likely to listen to a leader from Africa remains to be seen.

With intensified pressure from inside his country over the recent successive fuel increases, and another in the pipeline, President Cyril Ramaphosa has consciously taken the unprecedented step of going straight to oil-producing nations to ask them to help ease the burden on the South African consumer brought about by the high price of crude oil.

Government announced that Saudi Arabia has decided to invest what amounts to R133 billion in South Africa’s energy sector due to Ramaphosa’s visit.

It’s also clearly no coincidence that Ramaphosa’s latest tour has included the world top two oil producers, the United Arab Emirates and Saudi Arabia. It reveals part of what his intention is – to negotiate a deal with them to increase their oil production. The president first touched down in Nigeria, then headed to Saudi Arabia and was scheduled to conclude his tour in the UAE.

These countries are leading members of the 14-member Organisation of Petroleum Exporting Countries (Opec), which controls 61 percent of world oil exports.

Saudi Arabia alone occupies the second spot among the top-10 oil producers, with an output of a little more than 12 million barrels per day (bpd) in 2017, after the United States, which was at 15.5 million bpd last year. Although the UAE was not a founder member of Opec, which it joined only in 1967 after its founding in September 1960, the country enjoyed a fair production at 3.765 million bpd, according to 2017 figures, with the seventh-largest oil reserves globally of 97.8 billion barrels.

While Ramaphosa toured the three nations, it was clear the two Arab nations were his targets. He appeared to have included Nigeria as a fellow African country and a leading economy on the continent. Nigeria could play a role to influence Opec to listen to Ramaphosa’s plea for something to be done about the crude oil price.

In the same vein, nobody would be surprised if he takes similar trips to other African oil producers such as Liberia, Libya, Gabon, Angola, Equatorial Guinea, and the Congo in future. He would no doubt like them to consider the economic situations in non-oil producing countries on the continent, including South Africa and its fellows in southern and East Africa, by outlining the precarious African economic case at Opec gatherings.

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For Ramaphosa these are trips worth taking, as his mission is to stabilise the South African economy first and then extend his “new dawn” vision to the rest of Africa, as a priority. Increasingly prohibitive crude oil prices and resultant fuel increases have become an albatross around the nation’s neck, and are bound to be a target for Ramaphosa if his approval rating is to remain strong among South Africans.

A new study by South African Citizen Survey has shown that his popularity or favourability among the adult population moved from the highest mark yet of 57% to 66% in June, and those who believed he was doing his job well increased from 64% in March to 68% in June.

Ramaphosa has to defend this now amid major unhappiness at the fuel price, which is largely out of his control.

Recently Opec took a decision to decrease their production levels and were joined by some non-Opec producers in a move widely interpreted as being made to shore up the global oil price. It caused huge universal outcry, including a frenzy of personal attacks against Opec by the US President Donald Trump, who claims the price is now artificially high.

During his visit to Riyadh, Ramaphosa asked Saudi Arabia to consider increasing its production in the interest of economic peace, as the high fuel price has been hurting the South African economy. He was expected to deliver the same message in Abu Dhabi and elsewhere.

Whether Saudi King Salman bin Abdulaziz al Saud and Crown Prince Mohammad bin Salman will listen to him remains to be seen.

Energy Minister Jeff Radebe confirmed the issue was top of Ramaphosa’s agenda in the Middle East.

“It has a very important bearing on the price of oil. That is why we are looking to oil-producing countries to put more oil in the market so that the price of oil can go down, so that we can be able to mitigate against the negative impact of the hike of fuel prices in South Africa,” Radebe said.

– ericn@citizen.co.za

 

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