JOHANNESBURG (Reuters) – South African petrochemicals giant Sasol Ltd on Wednesday cut its guidance for synthetic fuel production and liquid fuel sales for this financial year due to a three-week nationwide lockdown linked to coronavirus.

Sasol is now expecting to produce approximately 7.3-7.4 million tons of synfuel against the previously guided range of 7.7–7.8 million tons, the company said in a statement to the Johannesburg Stock Exchange.

It is also targeting sales of 50–51 million barrels of liquid fuel for the financial year 2020, against 57–58 million barrels previously, it said.

Synfuel or synthetic fuel is a form of liquid fuel made from coal in South Africa. Sasol is the world’s biggest producer of motor fuel from coal.

South African President Cyril Ramaphosa imposed a nationwide lockdown at the end of March to contain spread of the deadly coronavirus, which has already infected 1,749 people in the country and killed 13.

The lockdown, which prompted rating agency Moody’s to downgrade the country’s sovereign rating to junk, crashed domestic demand at a time when the economy had already slipped into a recession.

It is projected to contract further in the current financial year.


“Sasol’s management team is in the process of proactively identifying further measures to provide an additional buffer against short-term volatility,” said the company in its statement, referring to the fall in demand in the country.

The group, which is also facing high debt levels and falling oil and chemical prices, said it has decided to suspend production at its inland crude oil refinery Natref from April 9.

“A decision was also made by Sasol to reduce daily production rates at our Secunda Synfuels Operations (SSO) by approximately 25%,” it said.

A further reduction in rates may be required depending on further developments in the fuels market, the company added.

However, Sasol said despite the suspension of output at the Natref refinery and lower production rates at SSO, the country’s current demand for fuels and chemicals, including sanitisers, will be met.

It had said on March 31 that its full-year results could be hit by potential disruptions to production, supply chains and construction as the coronavirus continued to spread across the world.


(Reporting by Promit Mukherjee; Editing by Jan Harvey)

This article was first published on Reuters Africa and is republished with its permission.

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