Sasol halts production at inland crude oil refinery as fuel demands drops

Production at Sasol's fuel refinery, Natref, will be suspended from Thursday due to an "unpredecented decline" in demand since the start of the national lockdown, the company announced on Wednesday.

The inland crude oil refinery, located in Sasolburg, is operated in partnership with Total South Africa.

The petrochemical group said it decided to suspend the production "until further notice".

The comes after President Cyril Ramaphosa last month announced three-week national lockdown in a bid to curb the spread of the coronavirus. The lockdown is scheduled to end on April 16. Only businesses deemed essential can operate during this period. 

Because of the lockdown, the country has seen a sharp decrease in demand for fuel. Much of South Africa's industrial production has been halted or placed into care and maintenance for the shutdown period, while companies have instructed staff to work from home. 

Sasol, which has also been hit hard by the recent plunge in oil prices, now expects liquid fuels sales volumes to be approximately 50 – 51 million barrels for FY 2020, lower than its previous guidance of 57 – 58 million barrels. 

It said that low fuel demand had also prompted it to reduce daily production rates at its Secunda Synfuels Operations by approximately 25%. 

"We will maintain these production rates until further notice, while carefully monitoring the supply and demand balance. A further reduction in production rates may be required depending on further developments in the fuels market." 

Synfuels production volumes are to be approximately 7.3 – 7.4 million tons, against against the previous range of  7.7 – 7.8 million tons.

The company said it would still be able to meet the demand for chemicals, including sanitisers.

"At this stage a similar reduction in Synfuels chemicals demand is not being experienced, and Sasol is prioritising supply of chemicals within South Africa as well as strong export demand."

The group added that its mines would continue to operate despite the lower internal demand, which has reduced the need for external coal purchases compared to earlier estimates. 

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