Sasol aims for R50bn savings amid low oil prices

Johannesburg - Sasol aims to conserve up to R50bn in response to low crude oil prices.

Sasol senior vice president Cavan Hill told media on Tuesday that it had taken steps to cushion itself against the crude oil price changes.

It aims to conserve between R30bn and R50bn through cash savings, a review of the dividend policy and review of capital expenditure. In the six months ended June 30, Sasol had saved approximately R8.9bn.

The low crude oil prices have prompted Sasol to be selective in its gas investments, as the company responds to the volatile macroeconomic environment.

Sasol said it is susceptible to currency and crude oil price fluctuations.

A US$1 change in the crude oil price over a year impacts Sasol’s profits by approximately R810m over a year. On the other hand, a 10c change in the rand/dollar exchange rate affects Sasol’s profit by R650m.

Sasol’s operating model entails delivering “selective” gas-to-liquids (GTL) opportunities.

Addressing media on the company’s plans for gas in southern Africa in Johannesburg on Tuesday, Sasol executive vice president Maurice Radebe said investments in gas projects work well when the oil price is high and gas prices are low because Sasol can convert low priced gas into high value fuels.

Meanwhile, Sasol is still awaiting approval from the government of Mozambique of its proposed integrated oil, liquefied petroleum gas (LPG) and gas project in Mozambique, Sasol senior vice president John Sichinga said on Tuesday.

Sasol submitted the so-called field development plan to the Mozambican authorities in February this year.

Sichinga said the proposed project could unlock further investments in Mozambique in the next four years.

The development will see Sasol increase gas production from Mozambique. Sasol produces gas from the Mpande and Temane gas fields in the Inhambane province and is currently the only gas producer in that country.  

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