Sasol Slows Planned Refining Project

South African oil giant Sasol announced yesterday that it would delay the start of Project Mafutha and keep it in the feasibility stage while it weighs the pros and cons of the planned project.

Mafutha, a South African refining project that would transform coal into liquid fuel, was delayed, despite a R1.2 billion price tag already with another R400 million committed in the coming months.

The company blamed the delay on a lack of clarity about large-scale coal gasification, plus there isn’t a viable solution to carbon capture and storage (CCS). Sasol already produces one- fourth of South Africa’s liquid fuel.

Recently named the most sustainable Oil & Gas company by the Dow Jones Sustainable Index, Sasol’s upmost importance is to remain sustainable while maintaining an environmentally sound business model.

The Dow Jones Sustainable Index ranks and evaluates every company on their economic, environmental, and social performance. Sasol was named the world’s best in the oil industry for the first time.

Because of the massive potential for heavy carbon emissions at Mafutha, Sasol wishes to have CCS in place, but the technology comes with a huge price tag.
Officials said that for Project Mafutha to be a viable option moving forward, it would need substantial support from the government.

The South African government has already endorsed PetroSA’s 400,000 barrel a day refinery planned at Coega, but many believe that the support is only there because it is governmentally owned.

Sasol also has refining projects planned in China and Uzbekistan.

“One must never underestimate the complexity of these projects. (Project Mafutha) would be quite a drain on a company even of this size," said Shoaib Vayej, a portfolio manager at Sanlam Investment Management, who has been monitoring the situation.