Sasol's plans to quit Iran under way
Although cellphone giant MTN is refusing to pull out of Iran, petrochemicals giant Sasol is working hard to exit the Islamic republic that has been placed under sanctions by the United States and the European Union because of its nuclear programme.
Sasol has stopped buying Iranian crude oil and its spokesperson, Jacqui O’Sullivan, confirmed this week that Sasol’s talks with potential buyers to off-load its Arya Sasol Polymers plant in Iran were progressing. Sasol Oil used to procure a relatively small amount of Iranian crude, about 12 000 barrels a day, roughly 20% of the company’s crude requirement for processing at its Natref refinery in Sasolburg.
Sasol Oil chief executive David Constable.
‘We’ve stopped the purchases because of sanction fears. In terms of the polymer plant, we’re looking to divest, but talks with buyers are still at an early stage and we cannot say anything until it’s at an advanced stage,” O’ Sullivan said.
‘We’re working hard to try to conclude things within a decent time period. Those talks are ongoing and involve a number of business and government stakeholders.”
Dual-listed in Johannesburg and New York, the South African company, like other non-American firms doing business in Iran, is under pressure from the US to divest completely from Iran.
Sasol voiced fears during the past year that the US government, the EU and the United Nations could impose sanctions on the company because of its chemicals investments in Iran.
‘In view of recent developments regarding trade restrictions and oil sanctions against Iran, the Sasol Group is diversifying its crude-oil sourcing to mitigate risks associated with oil supply disruptions from the Middle East,” David Constable, Sasol Oil chief executive, said on March 12, announcing the company’s interim results for the six months ending December 2011.
In a US Securities and Exchange Commission filing last November, Sasol said: ‘We continue to evaluate the risks and implications of these sanctions on our investments in Iran. However, we cannot assure you that, as a result of these sanctions, our activities in Iran would not be adversely impacted and there would not be a material adverse impact on our business, operating results, cash flows and financial condition.”
Sasol is a 50% owner in Arya Sasol Polymer with Iran’s state-owned National Petrochemical Company. Pars Petrochemical, a wholly owned subsidiary of the company, is also a partner in the joint venture and supplies ethylene, which is used as a raw material for the chemical industry, or polymer plants.
The Iran plant, in the Pars special economic energy zone in Bushehr province on the Persian Gulf, was built in 2002 and started producing ethylene in February 2009.
Arya Sasol Polymer has been battling to some extent. In the latest interim results, the company said the Iranian plant had a capacity utilisation rate of 81%.
‘International polymer prices contributed to the decrease in operating profit, but their effect was partially offset by the weaker rand-dollar exchange rate,” Constable said.