Sasol declares force majeure as stalled oil shipments shut down Natref

Sasol

Sasol

  • Sasol has declared a force majeure on petroleum products due to the delay of crude oil shipments. 
  • This resulted in the shutdown of the Natref refinery. 
  • Sasol said steps were being taken to stabilise supplies from Natref and the situation would hopefully be resolved by month end.

Sasol has declared a force majeure on the supply of petroleum products after key refinery Natref was forced to shut down on Friday due to delays in the arrival of crude oil shipments.

Sasol said shipments were expected to start arriving on Saturday 16 July, which would see crude oil feed beginning to be restored to Natref.

The aim is to see Natref running at full capacity by month end.

Force majeure is a mechanism that frees parties from contractual obligations in the case of an extraordinary event that prevents them from performing as usual.

“Sasol Oil has declared a Force Majeure on petroleum products as a result of delays in the arrival of crude oil shipments which are beyond Sasol Oil’s control. These delays have impacted availability of crude oil feedstock for processing at Natref, which necessitates the shutdown of its Natref refinery,” a Sasol spokesperson told Fin24 on Saturday.

“In the circumstances, Sasol Oil will not be in a position to fully meet its commitments on the supply of all petroleum products from July 2022.”

The situation would hopefully be resolved soon, the spokesperson added.

“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.”

Crude oil that is destined for Natref is offloaded in Durban port, where it is first stored and then pumped around 600km to the refinery. The company did not immediately confirm what had caused the delay. But it is not the first time Sasol has had to declare a force majeure in recent months due to supply chain hassles affecting its routes. In April, it declared a force majeure relating to the export of some chemical products due to heavy rainfall and floods in KwaZulu-Natal, Fin24 previously reported.

At the time, it said production rates at some of its plants in Sasolburg had been impacted due to damage to the Sasolburg-Durban railway infrastructure.

The Natref refinery – which was commissioned in 1971 – has undergone a number of upgrades during its lifespan, including an expansion project to increase its capacity by around 25% to some 108 000 barrels per day. It is a joint venture between Sasol mining and TotalEnergies.

The two companies have warned that it could become unsustainable due to clean fuel regulations, which they have said could make operations unviable in the future.

But the news of Natref’s supply headache comes amid rising concerns over the state of South Africa’s refineries. Energy consultant Citac recently warned that amid rising fuel costs, the country’s petroleum imports could triple by 2023 compared to pre-pandemic levels, as increasing numbers of domestic refineries are forced to shut their doors. South Africa needs some 25 billion litres of fuel a year and already meets more than half that demand through imports.

Natref’s shutdown on Friday follows hot on the heels of several refineries in SA that have had to suspend operations either temporarily, indefinitely, or permanently.

In February, BP and Shell announced they would be halting operations indefinitely at Sapref – Southern Africa’s biggest crude oil refinery, which can process some 180 000 barrels a day and accounts for 35% of SA’s refining capacity. By March, Mineral Resources and Energy Minister Gwede Mantashe confirmed that government, through the Central Energy Fund, was considering acquiring Sapref in a bid to save it.

Meanwhile Astron Energy’s Cape Town facility, which had a 100 000 barrel-a-day capacity, shut its doors in 2020 after a devastating explosion that cost two lives. Similarly, Engen’s Durban refinery, which had a capacity of 120 000 barrels a day, has also remained closed since an explosion in late 2020.

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