Botswana Oil Enlightens Traders
Lesedi Mkhutshwa | Monday March 9, 2020 12:34
He said this during the pricing workshop, which attracted key players in the oil and gas industry in the northern part of the country. In his address Kenamile said that in the past they identified a gap in understanding of oil pricing.
He said that they have encountered that some of the citizen-owned companies are not well-informed in pricing of petroleum products.
He added: “Some of them walk into our offices everyday and have a price for their oil. We engaged with them and realised that they do not quite understand the pricing methods”.Kenamile also said that the country is currently experiencing a lot of challenges in the oil and gas sector and one of them is security of supply, which is generally caused by the nature of the market.
He, therefore, said that it is very crucial to understand the pricing method and stick to credible and reputable suppliers or service providers near home to avoid uncertainty and risk. He said that currently Botswana consumes 100 million litres on a monthly basis but the International Oil Companies (IOC) operating in the country are not necessarily trying to secure petroleum products for Botswana.
The COO explained that: “IOCs here are not in the business of bringing products for Botswana, but they bring enough products to sell right away because of the pricing method, as the price keeps changing everyday. They can’t afford to keep a lot of stock therefore sell it right away and that cannot work for the country”.Kenamile said Botswana Oil plays a role in securing enough petroleum products for the country and with a strategy to consolidate imports to cover the demand for local consumption.
He said that for that to happen they need to move the sourcing aspect from South Africa (SA) and move it to Botswana so as to benefit in accruing the oil industry in the country. Kenamile described Botswana Oil as a downstream oil company, which supplies refined products all the way to the end consumer.
He also said: “The biggest risk in the industry is that we do not have much say in how much petroleum products flow to Botswana and when, which is a very big risk for the country because petroleum products are just like water and very essential for the economy, mines, transport and aviation sector”.
He added that foreign countries and foreign-owned entities usually make the decision on the petroleum product flow and market price.
The Botswana Oil COO gave an example that an IOC parent company in SA is responsible for sourcing its network in the region so when there is a shortage of fuel supply disruption it is a no brainier as they are going to prioritise Gauteng province in South Africa over Botswana.
He further said that when that happens Botswana which is outside of the country’s jurisdiction will be the one to face sanctions and that has been happening since 2010.
He said that even now the situation is still happening because SA imports 30% of its consumption of 26 billion litres whereas Botswana consumes 1.2 billion litres and that shows that they are relying on SA as a country to import on Botswana’s behalf.