Sasol lifts Natref output, ramps up LPG production

Sasol has flagged stronger fuel volumes and the start of domestic liquefied petroleum gas (LPG) production as key developments in its latest business update on the JSE on Thursday, while cautioning that the operating environment remains volatile amid geopolitical tensions.

The group said its Natref refinery increased production during the third quarter, to the end of March, supported by strong demand linked to energy security concerns.

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It reached a milestone with the commissioning of its LPG integrated processing facility, enabling the first in-country production of the gas, which is expected to reduce reliance on imports and add to gas and condensate output.

Sasol notes that the importance of domestic supply of both energy and chemical products was reinforced in the current quarter following the conflict in the Middle East and the associated closure of the Strait of Hormuz.

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Looking ahead, Sasol has revised parts of its full-year guidance, pointing to stronger fuel demand and operational stability in key assets.

Fuel sales volumes are now expected to be 10% to 15% higher than the 2025 financial year, up from earlier guidance of 5% to 10%. The upgrade reflects stable production at Secunda, higher output from Natref and sustained demand.

By contrast, gas production guidance has been lowered. Sasol now expects volumes to be 5% to 10% below the prior year, compared with earlier expectations of a marginal decline. This follows flooding in Mozambique and constraints at its petroleum production agreement assets.

Capital expenditure has also been trimmed to between R20 billion and R22 billion, from a previous range of R22 billion to R24 billion, as the group continues to defer non-critical projects and optimise spending.

Sasol says working capital has increased in response to the Middle East conflict, while hedging programmes remain in place to manage exposure to oil price and currency movements.

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Despite these adjustments, Sasol maintained that the broader operating backdrop is likely to remain uncertain, with geopolitical risks and shifting market conditions expected to persist through the remainder of the financial year.

Mixed performance across operations

For the nine months to end-March, Sasol reported a mixed operational performance across its regional and international businesses.

In Southern Africa, production at Secunda improved, supported by better coal quality and higher gasifier availability, resulting in output that was 8% higher than the prior year despite some plant outages.

Natref delivered stronger production and sales volumes during the quarter, even as the Middle East conflict constrained the supply of sour crude. Sasol mitigated this by sourcing crude from alternative regions.

However, output at the ORYX gas-to-liquids plant was significantly lower following a shutdown in early March due to gas supply disruptions, with the timing of a restart still uncertain.

In Mozambique, flooding disrupted condensate logistics and transport, forcing a reduction in gas production.

Chemicals Africa recorded higher revenue quarter on quarter, driven by improved volumes and prices. Internationally, the US business benefited from better pricing and production performance, while Eurasia faced higher input costs and feedstock constraints, which affected output and led to force majeure declarations on certain products.

Sasol said tight global supply is currently supporting demand, but it remains cautious about the medium-term outlook, particularly as input cost pressures persist.

The group reiterated that its focus remains on maintaining operational continuity, managing costs and ensuring reliable supply to customers in a shifting global environment.

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Sasol’s share price traded 1.32% higher at around 10am on Thursday at R220.48.