Sasol has reiterated to the market that the gas it supplies to industrial customers from the Mozambique gas fields will decline between 2025 and 2026. Last year, it indicated that it would stop supplying local industrial customers by June 2026.
But the energy and petrochemicals company say there is a readily available solution and that industry players are securing global supplies of liquefied natural gas, also known as LNG.
Sasol was out with its half-year financial results, posting a 34 % decline in headline profit for the six months ended December 2023. The company cited a volatile macroeconomic environment and continued inflationary pressure as key drags on the business.
Sasol attributed the decline in revenue and profit performance to a combination of lower chemical product prices and unstable product demand. Factors out of its control like inflation and the exchange rate also hobbled performance.
As industry players who rely on Sasol for gas supplies fret about it being on the record saying that it will halt supplies by June 2026 due to declining flows from Mozambique, Sasol’s CEO says the most practical solution will be to import liquefied natural gas. And notes that the Department of Trade, Industry and Competition and the Department of Minerals and Energy have begun to gather industrial energy consumers to begin the process.
“The only longer-term sustainable option that we know is LNG, so LNG is available globally. We need to plan for that, to bring it in as an energy vector in SA and that we can get the infrastructure and the parties well in advance gathered so that we can be ready when the gas starts to decline from the gas fields in Mozambique and that we can bring LNG, so the mere fact that some needs to secure that gas offtake and therefore you need to up your balance sheet to secure that LNG cost, you could just ask for the gas to be delivered and the sellers of the gas would not require any guarantees/ secure that gas,” says Fleetwood Grobler, CEO: Sasol.
Market observers say given the country’s current challenges with energy and logistics, it would be yet another blow to the economy if the gas supply issue was not resolved timeously. As for Sasol’s results, there was little surprise given the decline in oil and chemical prices and broader economic dynamics.
“The minute the economic conditions become very volatile, the minute as a company you start having lower selling products and the very same product the demand thereof becomes very unstable and you also have to compete with inflationary pressures, even though in some other operations you may have some improvements, but now you start having issues with the transportation of your product, in this instance logistics issues regarding the likes of Transnet, then it’s not going to be surprising to see that your profit, your revenue will decline and I think this is what is happening with the likes of Sasol,” says Makwe Masilela, Chief Investment Officer: Makwe Fund Managers.
Sasol declared an interim dividend of R2 per share a significant decline from R7 per share declared for the same period in 2023.
Video: Company Results – Sasol reports 34% decline in half-year profit: Fleetwood Grobler
