South Africa’s Transnet signs $233mn settlement with Sasol over oil pipeline tariff dispute

South Africa’s chemicals and energy company Sasol and state-owned logistics utility Transnet have settled their long-running disputes over crude oil pipeline tariffs. According to Sasol’s statement on May 23, the two parties reached a ZAR4.3bn ($233mn) settlement agreement which became effective immediately.

“On 18 May 2025, Sasol Oil and Transnet signed an agreement to settle their respective disputes, which became effective on 23 May 2025 having met all suspensive conditions,” Sasol said. “In terms of this settlement, Transnet will make a net payment to Sasol Oil of ZAR4.3bn (exclusive of VAT) on or before 30 June 2025 in full and final settlement of all these disputes.”

The dispute originates from a 1967 agreement between the South African government and French oil company Total (then known as Compagnie Française des Pétroles (CFP), and now TotalEnergies), aimed at establishing a crude oil refinery inland, during a period when coastal refineries were unable to meet demand in the interior regions. To encourage Total’s involvement in the Natref refinery project by Sasol, the government introduced a pipeline tariff system designed to align the costs with those of operating a coastal refinery.

Sasol, initially founded as a state-owned company in 1950 and later privatised in 1979, holds a 63.64% stake in Natref, located in Sasolburg in the Free State province, while the remaining share is owned by TotalEnergies.

In 2017, Sasol Oil and TotalEnergies took legal action against Transnet, claiming the company had imposed excessive charges for transporting crude oil from Durban to their inland refinery. This, they argued, breached a 1991 revised agreement that required transport tariffs to be consistent with those for coastal refineries.

Sasol stated that, as a result of the breach, Transnet had overcharged Sasol Oil for transporting crude oil over several years. According to court documents, both Salol and TotalEnergies agreed that, starting in 2008, Transnet failed to meet its obligations by increasing crude oil tariffs at a higher rate than those applied to refined products.

 In June 2024, the high court ruled in favour of Sasol and TotalEnergies, awarding Sasol ZAR3.89bn in damages along with about ZAR2.3bn in interest, bringing the total to about ZAR6.2bn (approximately $344mn), as reported by Reuters at the time. Transnet responded by stating it would appeal the ruling, citing major financial and operational consequences. In August last year, Transnet filed a counterclaim against Sasol Oil, seeking to recover ZAR855mn, excluding VAT and interest. 

As reported by News24 on May 24, TotalEnergies first launched its action in 2013, with the claims consolidated into one action. When contacted by the media agency for comment, Transnet spokesperson Ayanda Shezi said the logistics group welcomed the outcome of the mediation process, saying it put an “end to over 10 years of litigation on the matter”.

Natref’s change of ownership

In December 2023, TotalEnergies reached an agreement to sell its 36.36% share in Natref to the UK-headquartered Prax Group. The deal, pending regulatory approval, represented Prax's first move into the African market and was in line with TotalEnergies' plan to offload non-core assets.

Despite several setbacks, including a fire at the refinery in January 2025, Sasol continues to operate its synthetic fuel facilities, which use coal as a feedstock, ensuring some level of domestic fuel production.