Energy and Petrochemicals group Sasol remains on track to implement its re-engineered operating model on July 1, reorganising the company into two upstream business units, three regional operating hubs, and four “customer-facing” strategic business units.

In an update to shareholders on the group’s operational performance in the first nine months of the current financial year, acting CFO Paul Victor indicated that the reorganisation of the executive, senior and middle management structures to support the new operating platform were under way, with the top three management layers, including the group executive committee, already finalised.

The process to confirm the appointments of the organisation’s “fourth decision- making layer”, meanwhile, remained on track for completion this month, while the group was concurrently finalising “a streamlined and robust internal governance and decision-making framework”, which would also become effective from July 1.

“Our estimates for the savings already achieved in the course of the current financial year are R205-million. Since many of these savings were realised during the second half of the financial year, the savings are equivalent to R560-million for a full year,” said Victor.

This would slightly offset the implementation costs of the programme for the current financial year, which were expected to be around R1.1-billion.

“We remain confident that this programme will generate sustainable yearly savings of at least R3-billion, in real terms, with the full benefit being evident from the 2016 financial year,” he commented.

PROJECTS UPDATE

Meanwhile, Victor added that Sasol would continue to advance its various growth projects, saying these would enable the group to produce increased volumes over the near to medium term.

Construction on the Fischer-Tropsch wax expansion facility, in Sasolburg, continued to progress.

The commissioning of the new slurry bed reactor, which was “critically important” for the capacity expansion, was expected during the fourth quarter of the year, while commissioning of Phase 2 of the project was on track to take place during the second half of 2016.

The total project cost for both phases remained unchanged at R13.6-billion.

Similarly, the Sasol Synfuels growth programme was nearing completion, with beneficial operation of the entire programme expected to start at the end of the year.

“Following the successful commissioning of the gas-heated heat exchange reformers (GHHER) East plant last year, GHHER West is being installed and beneficial operation is expected towards the end of the third quarter of the 2014 calendar year. The final cold separation modifications will be completed during the scheduled Synfuels phase shutdown in September,” Victor noted.

Elsewhere in Southern Africa, the construction of a R2-billion loopline on the Mozambique to Secunda gas pipeline was progressing well, with beneficial operation expected during the second half of the year.

In addition, through Sasol New Energy, the group continued to advance the development of the $246-million 140 MW gas-fired power plant at Ressano Garcia, also in Mozambique, in partnership with State-owned power utility, Electricidade de Moçambique.

Beneficial operation would be achieved in the second half of the year.

In Nigeria, commissioning of the Escravos gas-to-liquids (GTL) project was progressing, with beneficial operation of the first train expected to be achieved later this year.

Further afield, Sasol continued to make progress on the front-end engineering and design (Feed) work and was currently finalising the capital cost estimate and associated contracting strategy for its world-scale 1.5-million-ton-a-year ethane cracker and derivatives complex in Louisiana, in the US.

“This investment will establish our Lake Charles chemical complex as an integrated multi-asset site that will also facilitate and enable future growth in the region,” Victor noted.

The group had secured sufficient ethane transportation capacity on various pipeline systems, as well as term-based ethane supply agreements, while the air and water permits for the ethane cracker and derivatives complex and the US GTL and chemical value-adds facility had been issued.

“Provided the wetlands permit is received in a timely manner, all commercial and engineering construction contracts are substantially completed and sufficient funding has been raised, we anticipate taking the final investment decision for the ethane cracker and derivatives complex later this year,” he said.

Sasol had also entered the extended Feed phase of its Uzbekistan GTL project, with the majority of the technical Feed activities having been completed.

The final investment decision for this project was, besides other aspects, dependent on securing appropriate project funding, and confirming a suitable partner to take up 19% of Sasol’s current stake in the venture.

“We anticipate a final decision during the second half of the year,” stated Victor.