Sasol Legal Cases Mount Over Pipeline Charges, Emissions Limits

(Bloomberg) -- Sasol Ltd. is opposing a legal bid by South Africa’s state-owned logistics company to claw back almost 816 million rand ($44 million) in oil pipeline tariffs, adding to other cases against the fuel and chemical maker that threaten its biggest operations.

The company said last week in its earnings presentation that South Africa’s “uncertain regulatory environment” is one of Sasol’s persistent near-term challenges.

In the latest dispute, Transnet SOC Ltd. is suing Sasol and TotalEnergies SE for services related to the use of its pipeline to transport crude oil to their jointly owned Natref refinery in Sasolburg in the Free State province from the port city of Durban, according to a copy of court documents seen by Bloomberg. 

The latest developments in the case were first reported by Business Day newspaper. Disputes over the cost of using the line have been ongoing for a decade, with South Africa’s highest court ruling on it last year.

“The matter is currently subject to court processes and Transnet will make any detailed statements once these have been concluded,” a Transnet spokesperson said in a response to questions. In addition to the funds sought from Sasol, Transnet seeks 462 million rand in pipeline fees from TotalEnergies, which didn’t immediately respond to an emailed request for comment. 

The case adds to others against Sasol that could have bigger consequences. The company last month failed in its bid to have its Secunda petrochemical complex, the world’s biggest single-site source of greenhouse gases as well as host of other pollutants, exempted from limits to be imposed in 2025. It has since appealed the decision.

Emissions Case

The potential loss of its appeal over sulfur dioxide isn’t factored into the 35 billion rand writedown that it took on Secunda in its latest annual results. The company is “confident that we will get it over the line” and win the case, Sasol Chief Executive Officer Fleetwood Grobler said in an Aug. 23 interview. “But if the license is revoked because of that, I believe that is a severe impact and then a phased shutdown will be the result.”

Sasol is also facing a complaint for alleged excessive pricing of natural gas it produces from fields in Mozambique and transports to its own operations and private customers in South Africa by pipeline. The Competition Commission in July referred the claim against the company’s gas unit to the Competition Tribunal for prosecution.

“Sasol Gas is evaluating and considering the referral by the commission, and Sasol Gas will in due course respond as appropriate,” the company said in an emailed response to questions on Monday. 

“These matters have formed part of ongoing business for Sasol,” it said of the multiple suits. “We operate in a highly regulated industry across our value chain and the legal processes underway are a reflection of our business activity in this environment.”

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