Sasol, a JSE-listed chemicals and energy company, says it expects petroleum product production at its Natref refinery, which it co-owns with TotalEnergies SE, to resume by the end of July. The group also anticipates a favorable financial performance for full-year results, which will be released in August.
In a production and sales update on Monday for the fiscal year ending June 30, 2022, Sasol also stated that higher crude oil prices, refining margins, and chemical pricing aided its financial performance.
This was verified by Sasol in a Sens update on Tuesday. The update comes after South Africa’s largest gasoline manufacturer announced a force majeure on Natref’s supply of petroleum products on July 15 due to crude oil delivery delays to the refinery.
“Startup 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 business said.
The guarantee of restoration to production at the Natref refinery will make it the only crude oil refinery in operation in South Africa, as several of the country’s refineries have been closed or converted for other uses in the last two years.
However, Sasol’s synthetic fuels facility in Secunda has remained operational.
Sapref, the country’s largest refiner, announced plans to suspend operations at its Durban facility indefinitely beginning March 2022 due to the facility’s age.
Engen said in 2021 that it would close its Durban refinery and reconfigure it into an import terminal and product storage facility by the end of 2023.
Glencore’s Astron refinery, one of the country’s smaller refineries, similarly suspended operations in 2021 for nearly two years. However, earlier this year, the company announced plans to restart the refineries in the second part of 2022.
On Monday, Sasol also released a production and sales metrics update for the fiscal year ending June 30, 2022, noting that a favorable macroeconomic climate helped its financial performance throughout the time, due to higher crude oil prices, refining margins, and chemical pricing.
“This performance was further underpinned by strong cost and capital discipline as we continue to execute our Sasol 2.0 transformation programme.”
According to Sasol, despite lower volumes in the group’s mining and Secunda operations, the impact on its energy sector was compensated by a resurgence in fuel demand and higher pricing.
As a result, the group claims that this area of its business has stabilized and improved in the second half.
“The combination of slightly improved productivity at our own mining operations and higher external purchases resulted in our coal stockpile getting restored 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 off, its chemicals division reported a 22% increase in external sales revenue, which Sasol attributes to higher average sales prices over the period.
Furthermore, rising Brent crude oil and feedstock costs attributable to Russia’s ongoing invasion of Ukraine, as well as continued global supply chain issues, have caused the average basket price to jump by 39% in the third quarter of FY 2022 and 13% in the fourth quarter.
However, the above-mentioned positive performance was offset by lower sales volumes reported as a result of its 2021 divestment in the US-based 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, according to Sasol.
“After adjusting for the Q3 FY22 disposal of the European Wax Business, our chemicals sales volumes for FY22 were 10% lower than FY21 and 4% – 8% lower than previous market guidance, primarily due to the aforementioned KZN flooding impacts, lower demand and supply chain delays resulting from the ongoing conflict in 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 said.