SOUTH Africa is looking to source oil from Angola, Nigeria and Saudi Arabia to replace supplies from Iran, which is facing sanctions over its nuclear programme, Nelisiwe Magubane, director-general of the Department of Energy, said on Friday.

The US and European Union (EU) standoff with Iran has presented a dilemma for South Africa, which has relied heavily on oil imports from Iran. Finding alternative sources of crude oil would most likely result in South Africa paying higher prices.

South Africa has already been given a six-month reprieve by the US from sanctions over Iranian oil. It will need to cut back more on its imports from that country, however, to avoid those sanctions kicking in next year.

The US government has been urging countries to opt for non-Iranian oil, and the sanctions will bar investments in oil, gas and petrochemicals, as well as exports of refined petroleum products.

South Africa is still in talks with the EU on the impact of EU sanctions on oil exports from Iran, and Ms Magubane said on Friday that a "breakthrough" was expected soon.

"There is going to be a meeting in Moscow quite shortly, which we firmly believe is going provide a breakthrough with regard to the sanctions," she told reporters.

Ms Magubane said South Africa had argued that the sanctions would affect not only the South African economy but the economies of South Africa's neighbours as well.

Iran's oil exports have fallen by about 40% since the start of the year as western sanctions affect its vital oil industry, the International Energy Agency warned earlier this week.

The agency, which represents the interests of major consuming nations, said preliminary indications suggested exports fell to 1,5-million barrels a day in April-May, from 2,5-million at the end of last year.

"In months ahead, Iran may need to shut in production volumes if export markets remain similarly constrained and storage fills up," the agency said in its monthly report.

It said it believed Iran was still producing 3,3-million barrels a day, down from 3,5-million last year, and stockpiling unsold oil.

With Reuters and Siseko Njobeni