Sasol to restart production at Natref by end of July

Group also expects a positive financial performance for full-year results, set to be published in August.
Releasing a production and sales update on Monday, for the year ended 30 June 2022, Sasol also highlighted that elevated crude oil prices, refining margins and chemicals prices supported its financial performance for the period. Image: Waldo Swiegers/Bloomberg

JSE-listed chemicals and energy giant Sasol says it expects production of petroleum products at its Natref refinery – which it owns with TotalEnergies SE – to resume by the end of July.

Sasol confirmed this in a Sens update on Tuesday.

The update comes after South Africa’s largest fuel producer declared a force majeure on the supply of petroleum products from Natref on 15 July, following delivery delays of crude oil to the refinery.

Read: Sasol outage means all South African oil refineries are now shut

“Start-up is expected towards the end of July 2022. We currently have plans in place to maintain supply to customers and minimise any potential disruptions,” the company says

The assurance of a return to production at the Natref refinery will make it the only crude oil refinery in operation in SA, as the country has in the last two years seen many of its refineries either shutdown or converted for alternative use.

Sasol’s synthetic fuels refinery in Secunda has however remained in operation.

Sapref – which has been the country’s largest refiner – announced plans to halt operations at its Durban facility indefinitely from March 2022 because it had reached the end of its lifespan.

Read: Sapref to pause operations indefinitely in March

While in 2021, Engen announced its decision to shut down its Durban refinery and instead repurpose the facility into an import terminal and product storage facility come the end of 2023.

Glencore’s Astron refinery – one of the country’s smaller refineries – also saw a suspension of operations in 2021, spanning for almost two years.  However, earlier this year the group revealed plans to restore the refineries operation in the second half of 2022.

Sasol sales performance…

Also releasing a production and sales metrics update on Monday, for the year ended 30 June 2022, Sasol noted that a favourable macroeconomic environment boosted by elevated crude oil prices, refining margins and chemicals prices supported its financial performance during the period.

“This performance was further underpinned by strong cost and capital discipline as we continue to execute our Sasol 2.0 transformation programme.”

Read:
With record fuel prices, some rewards programmes are now downright meagre
There is a bear hiding on the JSE
Rocketing fuel prices set to drive SA interest rates sharply higher

Despite the group seeing lower volumes in its mining and Secunda operations, the impact of this on its energy business was offset by the recovery in fuels demand and higher prices, according to Sasol.

Consequently, the group says this segment of its business has stabilised and seen an improvement in performance in the second half.

“The combination of slightly improved productivity at our own mining operations and higher external purchases resulted in restoration of our coal stockpile to above market guidance of 1,3 – 1,5 million tons.”

“[The] Secunda operations delivered higher run rates in H2 FY22, supported by higher coal availability and natural gas allocation diverted from our Sasolburg operations.”

Slightly better placed, its chemicals business saw a 22% rise in external sales revenue, which Sasol says was boosted by higher average sales prices during the period.

In addition, higher brent crude oil and feedstock prices related to the ongoing invasion of Ukraine by Russia as well as continuing global supply chain challenges, have seen the average basket price rise by 39% in the third quarter of FY 2022 and by 13% in the fourth quarter.

Listen: Brent should trade back to $80 in time

However, Sasol says the abovementioned positive performance was offset by the lower sales volumes reported as a result of its 2021 divestment in the US-base chemicals business as well as lower production from its South African operations and export delays of certain chemicals following the KwaZulu-Natal floods in the second half of the year.

“After adjusting for the Q3 FY22 disposal of the European Wax Business, our chemicals sales volumes for FY22 were 10% lower than FY21 and below previous market guidance of 4 – 8% lower, mainly due to the aforementioned KZN flooding impacts, lower demand and supply chain delays following the ongoing conflict in the Ukraine and Covid-19 lockdowns in China.”

“In addition, [the] chemicals America [unit] experienced unplanned outages at the Louisiana Integrated Polyethylene JV LLC (LIP) Cracker in Q4 FY22, contributing to the lower volumes,” Sasol says.

Listen to Fifi Peters speaking to Wilhelm Hertzog of Rozendal Partners on why SA’s refineries are out of action (or read the transcript): 

AUTHOR PROFILE

COMMENTS   1

You must be signed in and an Insider Gold subscriber to comment.

SUBSCRIBE NOW SIGN IN

Completely dysfunctional.

End of comments.

LATEST CURRENCIES  

USD / ZAR
GBP / ZAR
EUR / ZAR
BTC / USD

Subscribe to our mailing list

* indicates required
Moneyweb newsletters

Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.
INSIDER SUBSCRIPTION APP VIDEOS RADIO / LISTEN LIVE SHOP OFFERS WEBINARS NEWSLETTERS TRENDING

Follow us:

Search Articles:
Click a Company: