Sasol CEO Fleetwood Grobler
Photo by: Bloomberg
Energy and chemicals company Sasol’s business continues to be impacted by a volatile operating environment and continued operational challenges, but, despite this, it delivered a stronger performance in the third quarter of its 2023 financial year, compared with the second quarter.
The company’s operational mitigation plans in South Africa are starting to show early signs of improvement, president and CEO Fleetwood Grobler says in a production and sales metrics report for the nine months ended March 31.
“We continue to focus our efforts on navigating external challenges, while improving operational stability and maintaining our safety focus,” he adds.
Sasol reports that the energy business continues to benefit from a stronger oil price and refining margin environment, with operational mitigation plans showing early signs of business improvement.
The company is on track with the phased roll-out of its full potential programme in its mining operations, with incremental improvements noted in productivity and coal quality delivered to the Secunda Operations (SO).
The coal stockpile remains well above target, supporting consistency in coal blending and supply to Sasol’s operations, it highlights.
At SO, Sasol says it has seen higher production volumes for the third quarter, compared with the second quarter, owing to increased equipment availability and improved reliability.
Additionally, the second reformer came back online in March, well ahead of plan, providing increased operational flexibility on the reforming units to maximise natural gas feedstock to SO.
In the period under review, Sasol says it experienced an electrical outage where its teams responded swiftly, thereby minimising the impact on its operations.
Sasol says it also experienced operational challenges at its Natref refinery, which negatively impacted on run rates in the third quarter.
The company continues to review its crude procurement strategy to reduce the high premiums on West African crude purchased, it notes.
The ORYX gas-to-liquid plant, in Qatar, encountered a leak on one of the diesel tanks in March, resulting in the shutdown of Train 2. Sasol expects start-up of the plant by the end of this month.
In the chemicals business, while overall demand and supply chain constraints have improved in recent months, prices, unit margins and demand remain below historical levels, Sasol points out.
Total sales volumes were 6% lower in the nine months compared to the prior period, while third-quarter volumes remained flat compared with the second quarter.
This was owing to higher sales volumes in Africa and Eurasia, offset by lower sales in America as more merchant ethylene was derivatised into higher-value products.
The Ziegler alcohol unit in Lake Charles has since resumed production at the end of the third quarter, in line with the plan.
The average basket price decreased by 3% compared with the prior period, while third-quarter prices were similar to that of the second quarter.
Price increases were seen in Africa on the back of improved demand, while prices in Eurasia and America reduced owing to recent lower feedstock and energy costs.
OUTLOOK
Full-year guidance remains unchanged across most segments, with the exception of Natref.
Sasol has revised its guidance for Natref downward to 500 m3/h to 530 m3/h given the challenges experienced in the third quarter.
Further pricing and demand volatility is expected for the remainder of the financial year, in light of the global macroeconomic environment and the potential for ongoing disruption from Eskom and Transnet on Sasol’s suppliers and customers in South Africa, the company says.
It notes that a coordinated effort is under way with Transnet to address the supply chain constraints associated with all Sasol products.