American Committee on Africa 198 Broadway, New York, N.Y
Total Page:16
File Type:pdf, Size:1020Kb
American Committee On Africa 198 Broadway, New York, N.Y. 10038 1(212) 962-1210 I Cable AMCOMMAF Some Notes on U.S. participation in the supply of oil to South Africa. Prepared for the International Seminar on an Oil Embargo against South Africa. Holland, March 14-16, 1980. Jennifer Davis American Cmittee on Africa Executive Director: George M. Houser/Associate Director: Paul Irish/Research Director: Jennifer Davis/Literature: Richard Knight OW, Page 1 As the excellent presentations prepared by Martin Bailey and the members of the Sanctions Working Group, Bailey, Rivers, Tanzer, and Turner give a ccmprehensive view of: a. South African energy and oil needs b. The sources of oil flows to South Africa> I will not attempt to duplicate that material, but present the brief facts below within the overall context of their papers. It should be noted that US-SA oil links function at two important and distinct levels 1. US oil companies, Mobil, Caltex (Texaco and Standard Oil of California) and Exxon play a central role in importing, refining and distributing crude oil and specialized pet roleum products. 2. US corporations such as the Fluor corporation, Badger and Raytheon, Babcock & Wilcox and Honeywell which have enabled South Africa to develop a "natural oil" substitut,. via the construction of major oil-from-coal plants. So far these have been state-sponsored projects. It can be assumed that unless checked, this will be an expanding area of co-operation. Fluor and its sub con~ctors have already played a vital role in the construction of the small SASOL I, and much larger SASOL II, currently beginning to come on stream. (see SW, and Bailey). It seems certain that this corporation will also be the key contractor in the planned construction of the expanded plant aimed at doubling projected SASOL II output,a4 known variously as SASOL II extension and SASOL III. In addition recent press reports indicate that private South African interests now plan the construction of a 4th oil-from-coal plant. The SA sponsors include General Mining, a major Afrikaans controlled mining house-and plans announced refer to the use of a direct liquifaction process. In addition, African Explosives & Chenical Industries, a giant South African company with ownership divided between, inter alia, Oppenheimer's Anglo-American corporation and Britain's ICI has a 3 year plan to turn out methanol equal to some 12 per cent of the country's total road fuel needs. US oil investments in South Africa form a very significant fraction of overall US direct investment. In addition, it appears certain that much of the short-term financing for the construction of SASOL II was provided viatssistance of Fluor; one prcminent US business journalist recently quoting an "off the record" figure of 60% ( see below, reference to Ex-IM applications). US-SA Oil investments in context of Domestic & Foreign Investment in South Africa. a. Total Value of all Fixed Investments: Reserve Bank estimate of "Fixed Capital Stock at Replacement Value" ( in dollars) page 2 1970 $34 billion 1977 $122 billion This total investment value was held in approximately the following ratio: Government Parastatals Private 1977 46% 10% 44% b. All Foreign-Held Investments Within Above Totals: 1977 Total Foreign Investment ( inc. loans) $ 26 billion This means 21% of South Africa's total investment. value is held by foreign persons and ccnpanies. Share of foreign holdings in direct investment: $ 10.5 billion Share of foreign holdings in non-direct investment: $15 billion c. North American Part in Total Foreign Investment: 1977- North American direct investments: $ 2.5 billion North American non-direct investments: $ 3.5 billion North American share of total South African investment value = 5%. North American share of total foreign-held direct investment= = 24% North American share of total foreign-held non-direct investment= = 23% d. US Oil Company Investment US oil corporation direct investments in South Africa comprise the largest involvement of US corporations in the South African economy as well as representing in the case of both Mobil and Caltex the largest individual US corporate holdings in the Republic. Total investment is estimated at between $750 million and $1 billion. Mobil and Caltex These two corporations control nearly 40% of the South African petroleum market, and 42% of South Africa's oil refining capacity. Both supply fuel to the police and military, and both have indicated that under SA legislation, they have no option but to continue doing so while their subsidiaries remain in South Africa. Neither company, when pressed has been willing to give any details of government contracts, defending their position by reference to SA legislation dealing both generally with official secrets and particularly with oil. Both companies are also, incidentally, signatories of the US sponsored code oE conduct known as the Sullivan Principles, and have used this to argue their "positive and progressive" role in South Africa. In neither ccmpany are black wlorkers unionized, and indeed, because of the capital intensive nature of the refinery operation, the relatively high skill nature of jobs available, the companies have used relatively few black orkers-progress, recently reported tends to involve hiring black guards, truck drivers and clerical assistants rather than chemists, engineers and refinery operators. Page 3 In addition, where the corporations have hired non-white labor, they have historically tended to accept the labor skill divisions propagated by the state, thus hiring so-called "coloured" workers, who are not subject to influx control and migratory labor regulations rather than African workers. Mobil Mobil in South Africa is 100% owned by Mobil Corporation, a US corpxratiort Mobil began its operations in South Africa in 1897, when a predecessor company, Vacuum Oil Company, established a branch in what was then the British Cape Colony. Today, two Mobil subsidiaries, both incor porated in South Africa, are engaged in refining crude oil, manufacturing and blending lubricants, and marketing petroleum products. Total assets in wholly owned operations amount to about $426 million in 1979, according to the company. Mobil Oil Southern Africa, with headquarters in Cape Town, is engaged in marketing a full range of petroleum products including fuels, lubricants, asphalt, and spec.il products-also international jet fuels and international bunkers. MOSA owns or supplies approximately 1,350 service stations and in 1977, held an estimated 21% of the inland market for all products. 1976 sales were estimated at $500 million. Mobil Refining Company Southern Africa owns a 100,000-barrel -a-day refinery at Durban. Mobil also has a 32.9% equity interest in South African Oil Refinery, which owns a lube oil refinery at Durban adjacent to MOREF's fuel oil refinery. In addition, Mobil carries on other relatively minor operations in South Africa, such as asphalt manufacturing, road surfacing, and marine and insurance activities. In 1974, Mobil reported employing 3370 people-1244 "non-white". In May 1978, the company employed 3036 people, 1414 "non-white", including 918 African. As will be seen from Table A,provided by the company, black workers occupied a miniscule number of skilled jobs. Caltex Caltex in South Africa is 100 per cent owned by Caltex Petroltum Corporation, an American ccmpany, which in tutn is jointly owned by the Standard Oil Ompany of California (Socal) and Texaco. Caltex Oil has operated in South Africa since 1911. Caltex activities in South Africa include refining and marketing of a full '6w range of petroleum products. It currently owns and operates a 100,000 barrels 4 d o. .oao 4per day lubricating oil and grease blending plant in Durban. It has a countrywide network of more than 1,000 retail outlets, and services many thousands of commercial and industrial customers. Caltex has a 23.8% equity share in SAFOR, a 3,000 barrels Page 4 a day lube base oil refinery in Durban, Caltex has no employees at that facility. As of June 30, 1978, Caltex Employed 2,066 people broken down as follows: 1,207 Whites, 476 Africans, 331 Coloureds' and 52 Asians. According to the company, 1978 sales were expected to amount to $500 million and at the end of 1978, fixed assets totalled approximately $200 million According to a June 1978 study on oil prepared for the Special Committee Against Apartheid by Bailey and Rivers, CAtex' investments may in fact total over $330 million, as plans had been announced in May 1977 to expand the Cape Town refinery. THE ROLE OF FLUOR Page 5 Fluor, a US multinational based in Irvine, California, is Fluor applied for the credit on SASOL's behalf in 1975. one of the largest engineering and construction firms in Ex-Im was slow in moving on Fluor's request and it wasn't the world, with revenues of $2.9 billion and earnings of until 1976 that the campaign to eliminate the restrictions $78.4 million in 1978. Among its current or recent pro came to a head. In the final days of the Ford administra jects are the building of a refinery in Saudi Arabia, work tion, 20 US senators, led by John Tower of Texas, gave a on the Alaska pipeline, and construction of an $800 mil letter to the White House asking the President to "funda lion copper mine and processing plant in the Peoples mentally re-examine our policy toward South Africa." The Republic of China. letter also said that restrictions on US ties to South Africa In recent years, Fluor has been heavily involved in the "are contrary to our goal of normalizing relations with other nuclear industry both in the US and abroad. It was also a countries and tend to limit our influence in South Africa." member of a consortium which built a refinery in Sasol It is interesting to note that Tower was supported in his burg, South Africa for the Natref National Petroleum Re 1978 Senate race with a $500 donation by the Fluor Pub finers.