Page 6 - DMEA Week 34 2022

DMEA POLICY & SECURITY DMEA

Prince Abdulaziz: OPEC ready to make

production cuts to correct oil price drop

GLOBAL SAUDI Arabia’s Energy Minister and OPEC Noting that the paper and physical markets
kingpin Prince Abdulaziz bin Salman Al Saud are becoming increasingly disconnected, he
said this week that the OPEC+ group is prepared added that the market is “in a state of schizo-
to reduce oil output as a means to correct the phrenia,” with “erroneous signals” being sent
recent fall in prices. “at times when greater visibility and clarity and
Speaking to Bloomberg, he said the group well-functioning markets are needed more than
had shown that it was prepared to act to coun- ever to allow market participants to efficiently
teract market volatility and was committed to do hedge and manage the huge risks and uncertain-
so again if required. ties they face.”
Noting that oil futures have dropped owing Having announced a quota increase of just
to perception rather than physical shortages, 100,000 barrels per day (bpd) following its latest
Prince Abdulaziz said: “The paper oil market meeting, OPEC and its deal with non-member
has fallen into a self-perpetuating vicious cir- producing nations have come under increasing
cle of very thin liquidity and extreme volatility scrutiny.
undermining the market’s essential function of Prince Abdulaziz said that the group would
efficient price discovery, [which makes] the cost begin working on a new deal “beyond 2022
of hedging and managing risks for physical users which will build on our previous experiences,
prohibitive.” achievements and successes,” seeking to prevent
Concerns about Chinese demand and reces- market volatility. ™
sion in the West have seen crude prices fall by
around $25 per barrel in recent weeks, down by
more than a third since the early-year highs of
the mid $140s. The minister said: “This is det-
rimental because without sufficient liquidity,
markets can’t reflect the realities of the physi-
cal fundamentals in a meaningful way and can
give a false sense of security at times when spare
capacity is severely limited and the risk of severe
disruptions remains high.”

COMPANIES
High oil prices boost Sasol in FY 2022

AFRICA SOUTH African chemicals and energy group “We benefitted from higher energy and
Sasol said on August 23 that it had posted a chemicals prices, as well as strong cost and cap-
strong performance in Financial Year 2022, ital discipline through the delivery of our Sasol
which ended June 30, 2022, benefiting from 2.0 transformation programme. This was off-
higher crude oil and chemical prices. set by lower volume performance, mainly due
In a statement, Sasol said its earnings before to the operational challenges experienced in
interest and tax had risen to $3.6bn, up from [Hthe first half of the financial year. We have
$975mn in FY 2021, while headline earnings seen improved performance on the back of
grew 21% y/y to $1.7bn.Given this robust per- more stable operations in the second half of the
formance, the company declared a gross final financial year.”
cash dividend of $0.86 per share, its first in three Listed on the Johannesburg Stock Exchange,
years and the highest in its history. Sasol has operations in 22 countries worldwide.
“Sasol delivered a strong set of financial Among other products, it supplies diesel, gaso-
results against the backdrop of increased volatil- line, jet fuel, LPG, alcohols, polymers, solvents,
ity resulting from ongoing geopolitical tensions, ammonia, methanol, crude tar acids, sulphur,
extended COVID-19 lockdowns and global illuminating paraffin, bitumen and residual fuel
supply chain disruptions,” the statement noted. oil.

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