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Monday, July 15, 2024

Sasol says closure of Natref refinery won’t cause immediate fuel shortages

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The last oil refinery in South Africa, Natref, was shut down on Friday due to delays in oil deliveries but its operator, Sasol, says it doesn’t expect fuel stations to run dry immediately.

Natref refinery was the last standing oil refinery in the country and it has now gone offline raising fears of fuel shortages at petrol stations.

Sasol spokesperson told Fin24 that no supply shortages are expected at fuel stations, including its own, at least for now.

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The company declared a force majeure, and said it won’t be able to supply of petroleum products. It refines oil to produce petrol and diesel.

Sasol did not want to divulge information about the origin of the oil that has been delayed, but confirmed that a shipment finally arrived on Saturday. The company says it is “pro-active” in finding new sources of oil.

It expects that Natref will be running at full capacity by end-July.

The delay in crude oil supplies to Sasol comes at an unexpected time. While there has been a supply squeeze in recent months, demand for oil has started to weaken in response to red-hot prices. Growing fears about a global recession are also weighing on demand. Last week, oil prices dropped below $95 a barrel for the first time since the invasion of Ukraine.

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Last refinery standing

Natref was the last operating crude oil refinery in South Africa, and following its loss, the country must now import 80% of its fuel. Sasol’s synthetic coal-to-fuel operation is delivering the rest. That operation is running at full capacity, Sasol’s spokesperson reported.

South Africa will have to ramp up imports of diesel and petrol to make up for the loss of Natref.

Earlier this year, the country’s biggest crude oil refinery, Sapref, was closed by BP and Shell. New clean fuel regulations require the companies to invest billions in an upgrade of the refinery. Instead, they put Sapref up for sale. The government expressed interest to buy it, but no deal has been struck.

Sasol and its partner in Natref, TotalEnergies, also indicated that Natref may become unsustainable due to the regulations, which will require a R45 billion upgrade to the refinery.

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Explosions have closed the Cape Town refinery of Astron Energy (formerly Caltex), as well as Engen’s Durban refinery in recent years. PetroSA’s Mossel Bay refinery is also closed as it can’t secure enough feedstock from offshore gas fields.

Fuel imports will be ramped up, and Sasol’s coal-to-fuel plant is at full capacity.

At this stage, petrol or diesel shortages are not expected at fuel stations, after South Africa has been left without a single operating oil refinery. – News24

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