Sasol to position business for sustained profitability in low-oil-price environment

Sasol will be stepping away from its oil business to refocus on its chemicals business.

Sasol has announced that it will overhaul its business due to the impact volatile oil prices and high debt have had on the company. 

The company has been under pressure from the combined effects of low global oil prices and the impact of Covid-19.

As the impact of the coronavirus hit oil prices, Sasol announced in March it had hedged about 80 percent of its synthetic fuel production in the fourth quarter at about $32 a barrel. Oil hedges are in place for the rest of the 2021 financial year in a bid to protect liquidity.

The company also has a debt burden of about $10 billion and has been looking for a partner for its US Lake Charles Chemical projects. 

The decline in domestic fuel demand due to the lockdown has also seen the group temporarily suspend production at its inland crude oil refinery in April. However, production is set to resume by the end of June and the facility will ramp up to full capacity as demand for jet fuel increases. 

The overhaul will see Sasol take a step back from oil investment to focus on its chemicals business, where it had differentiated capabilities and a strong market position which could be expanded over time. 

Sasol further stated that it will reposition the business for “sustained profitability in a low oil price environment” and improved cash generation.