SA’s largest fuel producer, Sasol, has declared force majeure after delays in crude oil shipments shut down its Natref refinery but says at this stage it does not expect fuel shortages.
The company said shipment delays had affected the availability of crude oil feedstock for processing at Sasolburg’s Natref plant, necessitating the closure of the refinery.
The development will stoke fears of a total petrol outage. The shutdown means SA’s entire oil-refinery fleet is out of action after other facilities suspended production over the past two years.
Force majeure allows a company to suspend its contractual obligations if it cannot deliver on these due to circumstances beyond its control.
Sasol spokesperson Alex Anderson said that Sasol Oil will not fully be in a position to meet its commitments on the supply of all petroleum products from July 2022.
Tanker
However, he told Business Day on Sunday that the crude tanker had now arrived in Durban and cargo dispatch processes are under way.
This should see the restoration of crude oil feed and allow Natref to start up to run at maximum production capacity by the end of July.
“We do not anticipate any fuel supply shortages to fuel stations, including our own,” Anderson said. “Sasol Oil is engaging industry role players as well as affected customers regarding the product shortfalls and will communicate on an ongoing basis on measures taken to stabilise supply from Natref refinery,” he said.
Economist Azar Jammine attributed the shipment delays to the ripple effect of the geopolitical events in Eastern Europe. “This is all a function of the disruption to the supplies of oil globally arising from the Russian invasion of Ukraine,” he said.
Surging oil prices in the wake of the Russia-Ukraine war have hurt already cash-strapped consumers, who have also been trying to stave off higher inflation.
Commissioned in 1971, the Natref refinery is 63.64% owned by Sasol Mining with TotalEnergies SA holding the balance. The refinery has undergone a number of upgrades during its lifespan, most notably an expansion project to increase its capacity by about 25%.
Imports
Ninety One portfolio manager Hannes van den Berg said it is too early to gauge the extent of the implications of the refinery shutdown and how temporary the Natref outage will be. But he stressed the urgency of reopening the refinery.
“This is a 108,000-barrel-a-day plant,” he said. “To get back to stable supply from the Natref refinery is in the best interest of everyone.”
SA relies on imports to meet up to 60% of its fuel demand, according to a report by energy consultant Citac.
According to Bloomberg, only Sasol’s synthetic fuel operations, which use coal as a feedstock, remain fully operational, making up about a fifth of nationwide capacity.
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