Shutdown hits Sasol output
Natref refinery comes to rescue as company says that longer maintenance, not strike, affected Secunda plant
Sasol had reduced its production guidance for its Secunda coal-to-oil plant because maintenance was taking longer than expected, it said in its September quarter update on Thursday. However, thanks to improved performance at its Natref refinery, Sasol said it was still on track to achieve its sales target of about 58million barrels of fuel in its 2019 financial year, which ends in June.
Sasol reduced its production guidance for its Secunda coalto-oil plant because maintenance is taking longer than expected, it said in its September quarter update on Thursday.
However, thanks to improved performance at its Natref refinery, Sasol said it is still on track to achieve its sales target of about 58-million barrels of fuel in its 2019 financial year, which ends in June.
In its 2018 financial results, Sasol reported that Secunda’s synfuel production fell 3% to 7.6million tons.
Trade union Solidarity maintains that a strike at the plant had a direct effect in causing the drop in production due to delays, saying its members are gearing up to increase pressure on the petrochemical producer.
The decline in shareholder confidence and production will eventually exceed the costs of including white workers in the group’s employee share ownership plan, said Solidarity CEO Dirk Hermann.
Sasol, however, denied that industrial action is at the root of the delay, saying it is due to technical issues with the steam-line project. “The planned full shutdown at our Sasol Secunda Operations West factory was longer than estimated, mainly due to technical issues with the Steam Header 2 project and challenges with start-up, which further delayed the commissioning date,” the group said.
Sasol said it has lowered expectations that Secunda will pick up production in the financial year under way, now expecting it only to match the prior year’s 7.6-million tons.
The chemical group’s gas joint venture in Mozambique is expected to meet its target of between 114-billion and 118-billion standard cubic feet for its 2019 financial year.
“Mining will achieve the targeted production levels of 40million tons for the full year. At our Mozambican upstream operations, we delivered a robust production performance, in line with expectations.”
Sasol said it benefited from higher Brent crude oil and product prices during the quarter and a weaker rand.
The shares were given a fillip in 2018 by rising oil prices, with Brent crude reaching a fouryear high in October as a result of tension in the Middle East. The US is set to impose more sanctions against Iranian oil in November, but oil prices subsided this week amid US reports showing rising production.
Data showing rising inventory levels in the US and fears over rising trade tension have taken the appetite out of the trade for oil, which is bracing for further negative headlines, said Oanda analyst Stephen Innes in a note. “It’s incredible how quickly prices can plummet when everyone’s running for the same door.”
Sasol’s share price was 1.9% lower at the close at R509.90 but up 19.09% so far in 2018. Shortly after the JSE closed Brent oil was at $79.43 a barrel.