Sasol Integrated Report 2023 - Book - Page 59
INTRODUCTION
ABOUT SASOL
STRATEGIC OVERVIEW
CREATING VALUE
PERFORMANCE
GOVERNANCE AND REWARDS
ADMINISTRATION
SASOL ENERGY AT A GLANCE // Leading the energy transition in Southern Africa CONTINUED
Energy landscape
STRATEGIC FOCUS
Safety is a top priority for Sasol Energy. We are focusing on strengthening process
safety in our operating facilities, embedding leading indicators in the business and
promoting personal safety across the organisation. We believe that Zero Harm
is possible.
Since 2020, we have taken several steps to reset and position Sasol Energy for long-term success.
This includes resizing the portfolio through the divestment of non-core assets; delivering on Sasol 2.0;
growing the mobility and commercial businesses which will position us to extend our market leadership
by 2030; and building key capabilities.
The success of this business is dependent on Mining. Our focus in FY24 therefore remains on
improving the quality of coal from Mining. We are far advanced with a technological solution which will
reduce the amount of sinks in existing coal supply. We aim to make a final investment decision later
this calendar year.
IR
Refer to Sasol Mining feature, page 61
To remain competitive, we are considering investing in a hybrid refinery at Natref that will bring the
first hybrid fuel to the country and comply with Clean Fuels 2 at a low capital investment.
IR
Refer to Natref feature, page 60
Our focus on the break-even cost at Secunda Operations (SO) remains undimmed and we are
investigating options to improve our cost position.
OUR PRIORITIES FOR THE YEAR AHEAD REFLECT:
An immediate
focus is on safe
and reliable
operations
A reset of our
business to maximise
profitability in existing
operations by increasing
production volumes,
unlocking cash through
operational and
commercial excellence
and driving a lower
cash break even
Advancing our decarbonisation
ambition to 2030 to reduce
greenhouse gas emissions
by 30%, integrating
1 200MW of renewable
energy and low-carbon
feedstocks into our
operations and progressing
our green hydrogen projects
at a more measured pace
Building a culture
of diversity,
inclusivity and
belonging with a
One Sasol mindset
Overview
The first half of the year was extremely challenging, marked by a combination of coal feedstock, plant reliability
and regulatory challenges. We implemented a number of interventions and allocated our best resources to
address the issues. As such, we are encouraged by the significant improvement across the business in
the second half, particularly operational excellence, gas production, cost containment and cash management.
We have exceeded our production, working capital and sales volume forecasts guided to the market across
most areas. Our focus on customer centricity remains paramount as we transform the business to low-carbon
solutions.
The global economic landscape remains volatile, including fluctuating oil and petrochemical prices, an unstable
product demand environment and inflationary pressure. In South Africa, the underperformance of state-owned
enterprises, loadshedding and socio-economic challenges continue to impact volumes, margins and resultant
profitability. Despite this, we were able to increase our sales volumes to the higher yielding margin channels
through our Sasol Rewards loyalty programme and improved customer convenience offerings.
Energy markets are fundamentally shifting towards
low-carbon and are impacted by ongoing supply chain
challenges and geopolitical tensions. Crude oil prices
and refining margins have declined from the highs of
2022 amid an easing of supply uncertainty. In South
Africa, supply dynamics have fundamentally shifted
with the shutdown of the South African Petroleum
Refineries (SAPREF) and Engen Oil Refinery (ENREF),
while energy demand has been impacted by frequent
loadshedding.
Diesel demand has surpassed pre-pandemic levels,
driven by power demand and increased use of road
freight transport due to constraints in rail logistics.
Petrol demand remains weak, with a shift towards
work-from-home, high prices and the improved
efficiency in technology. The outlook for petrol is
not encouraging as sales of smaller and more
fuel-efficient passenger cars are likely to continue,
exacerbated by hybrid and electric vehicles in the latter
part of the decade. Electric vehicles will not require
petrol but rather electricity from charging units.
A significant part of our product slate is petrol, we are
assessing various technological options to mitigate the
risk of an oversupply of petrol to the country.
The global energy transition is gaining momentum
with several partnerships announced. Gas is seen to
be a transitionary feedstock and as such we continue
with exploration and drilling activities in Mozambique
to ensure a sustainable gas supply to external
customers and our own operations.
Challenging legal and regulatory issues
The regulatory and legal landscape is very challenging
particularly relating to the uncertainty on the National
Energy Regulator of South Africa (NERSA) Maximum
Gas Price (MGP) regulation. Despite the impact of
rising inflation, higher capital costs and commodity
prices, we have charged R68,60/GJ for two years.
Sasol submitted FY23 and FY24 MGP applications to
NERSA, both of which were published for public
comment. We await NERSA’s approval of the MGP for
both applications.
On 11 July 2023, the Competition Commission referred
to the Competition Tribunal complaints regarding
excessive pricing from certain Sasol Gas customers.
Sasol launched review proceedings, currently before
the Competition Appeal Court so that the Court may
consider NERSA’s jurisdiction to regulate gas prices.
SASOL INTEGRATED REPORT 2023
58
As communicated, Sasol’s application in terms of
Clause 12A of the Minimum Emission Standards (MES)
for alternative emission load basis for sulphur dioxide
from the SO boilers has recently been declined by the
National Air Quality Officer (NAQO). Sasol appealed the
decision to the Minister of Forestry, Fisheries and the
Environment and submitted its appeal to the Appeals
Directorate on 31 July 2023 as provided for in Section
43(1) of the National Environmental Management Act,
107 of 1998.
Decarbonising and developing low-carbon
energy solutions
In 2023, we made significant progress on the
execution of our 2030 greenhouse gas roadmap.
Notably, we signed power purchase agreements
(PPAs) to procure renewables of more than 600MW
for delivery in 2026 or earlier. We are also investing
US$1 billion over the next few years in Mozambique
to ensure a stable supply of gas to South Africa while
also progressing with several energy efficiency
projects.
We are shaping the development of South Africa’s
green hydrogen ecosystem, which includes
applications in fuel cell hydrogen mobility studies
to reigniting the steel industry and creating a global
sustainable aviation hub at OR Tambo International
Airport in Johannesburg. The re-purposing of existing
assets presents opportunities to fulfil the growing
demand for sustainable products.
The prefeasibility study on the Boegoebaai green
hydrogen project in the Northern Cape Province
has advanced and nearing completion as we await
certainty on the port development from Transnet.
An update on the port was provided by Transnet in
July 2023, however further details are required
before the prefeasibility study can be concluded.
There has been good momentum by the South African
government to develop a green hydrogen economy for
South Africa and we are supporting this through
various studies.
IR
Refer to green hydrogen export – Boegoebaai feature, page 60
