The two firms will still remain competitors in the domestic market but will jointly represent the African nation when pursuing global projects.

According to South Africa’s Minister of Minerals and Energy, Phumzile Mlambo-Ngcuka, the alliance will help the government to save spending foreign currency by providing the nation with locally-produced crude.

“We have a challenge as South Africa, in that we obviously don’t have our own crude [and, therefore,] we are a major importing country. So the strength of these two companies is very critical to us because they continue to make a big contribution at an overall macroeconomic level,” said Mlambo-Ngcuka.

Under the terms of the deal, the two firms will collaborate on upstream gas and feedstock projects and downstream petrochemicals. This move is seen by many in the domestic oil and gas sector as a first step in the government’s plans to shift from importing expensive crude to producing local petroleum products.

South Africa currently requires around 570,000 barrels of oil per day. The bulk of the imports, around 40% in 2002, come from Saudi Arabia.