Lower demand for petrol forces Sasol to suspend production
Much of South Africa's industrial production has been halted or placed into care and maintenance for the shutdown period.
Production at Sasol’s fuel refinery, Natref, was suspended due to an unprecedented decline in fuel demand since the start of the national lockdown, the company announced.
Natref, the inland crude oil refinery located in Sasolburg, is operated in partnership with Total South Africa.
Sasol announced the step in a statement to the Johannesburg Stock Exchange.
Because of the lockdown, the country has seen a sharp decrease in demand for fuel. Much of South Africa’s industrial production has been halted or placed into care and maintenance for the shutdown period. Companies having instructed staff to work from home have also influenced the sale of fuel significantly.
Sasol, which has also been hit hard by the recent drop in oil prices, now expects liquid fuels sales volumes to be approximately 50 to 51 million barrels for the 2020 financial year, lower than its previous expectations of 57 to 58 million barrels (approximately 7,3 to 7,4 million tons of synfuel).
Sasol will continue with its chemicals production, within prioritised parameters which include the daily reduction rates at Secunda’s synthetic fuels operations with approximately 25%, to meet the current market demand. Synfuel or synthetic fuel is a form of liquid fuel made from coal in South Africa. Sasol is the world’s biggest producer of motor fuel from coal.
“The country´s, as well as strong export demand currently for chemicals, including sanitisers, will be met,” Alex Anderson, Head of Group Media Communications said.
Sasol is prioritising supply of chemicals within South Africa and a reduction in Synfuels chemicals demand is not expected. Over the past few weeks, Sasol has experienced an increase in demand of nearly 400% for alcohol-based products and delivered close to eight million litres to the South African market and laboratories, production, marketing and supply chain teams are working around the clock to ensure a reliable supply of critical alcohol-based products to customers.
All Sasol’s mines are continuing with operations, notwithstanding lower international demand. All external coal purchases are being significantly minimised compared to planned purchases for this financial year.
“We will maintain these production rates until further notice, while carefully monitoring the supply and demand balance. A further reduction in production rates may be required depending on further developments in the fuels market,” Anderson said, adding that the management team is in the process of proactively identifying further measures to provide an additional buffer against short term volatility.
“More detail on production volumes and updated guidance will be provided in the Company´s third-quarter Business Performance Metrics report, to be released later in April. Safeguarding the health and well-being of employees and providing essential products to customers and stakeholders remains the company´s priority.”
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