NEGOTIATIONS with the European Union (EU) over the insurance of oil cargoes between SA and Iran were at a crucial stage, but the Department of Energy was optimistic on Friday that they would be resolved.

SA had received a 180-day waiver from the US on the importation of oil from Iran, after the US and the EU imposed sanctions against Iran over that country's nuclear programme.

But Pan-African Investments CEO Iraj Abedian said despite the waiver, ensuring that those cargoes were properly insured was vitally important otherwise their price would surge.

"No one in their right minds would just allow a cargo to be exported from Iran without insurance, " Dr Abedian said.

"No bank would finance a shipment without proper insurance.

"The cost is very difficult to estimate, but an indication can be gained from the fact that Iran was reported now to be offering a 40% discount on its oil exports."

Speaking during last week's post-Cabinet media briefing, the Department of Energy's director-general, Nelisiwe Magubane, said she was optimistic that negotiations with the EU would turn out in SA's favour, though she declined to divulge their exact nature.

Dr Abedian said there were only four major international shipping underwriters, with the top three being Europe-based - Lloyds of London, Munich Re and Zurich Reinsurance. "Going after the underwriters is the cheapest way to ensure that the sanctions are implemented," he said.

Last week, US Secretary of State Hillary Clinton said that SA and six other countries, including Turkey and India, had been granted 180-day waivers on the oil imports from Iran as they had taken steps to reduce these purchases.

Ms Clinton's announcement means that China is the only major importer of Iranian oil not to have received a waiver.

Iran has historically been one of the major suppliers of crude oil to SA and while no official figures have been released, it is believed that the percentage has dropped from about 40% to just below 30%. A Department of Energy official said privately that for some months no oil had been received in SA from Iran, thus contributing to the fall in imports.

However, Dr Abedian said that the extent of the fall in Iranian oil imports would be determined only after a year to 18 months.

"Taking month-by-month numbers at the moment doesn't make sense as many of the cargoes are still at sea.

"And even if an order has already been placed, then the shipping company would still have to find a slot in its schedule," he said.

During a parliamentary question session last week, Deputy President Kgalema Mothlanthe said that the sanctions imposed on Iran were not led by the United Nations.

"These sanctions are particularly stringent with regard to petroleum-related banking transactions," Mr Motlanthe said.

Dr Abedian said the US's issue with the banks was to ensure that they did not use a financial derivative or similar instrument to get around the non-insurance of oil cargoes.