Sasol and Petronas Move Forward With Negotiations on Uzbekistan GTL Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Negotiations are under way following the signing of a heads of agreement contract between Malaysia's Petroliam Nasional Berhad (Petronas) (Kuala Lumpur), Uzbekneftegaz (Tashkent, Uzbekistan) and Sasol (NYSE:SSL) (Johannesburg) for the development of a gas-to-liquids (GTL) project in Uzbekistan. A memorandum of understanding has also been signed between the three parties covering mutual cooperation in the oil and gas industry in Uzbekistan, which Petronas and Sasol are currently exploring. The talks with the Uzbekistani government are focused on the detailed requirements that will allow plans to proceed with the implementation of the next phase of the project and, according to Petronas, should lead to the setting up of a joint venture company.

The signing of the heads of agreement contract came after the positive outcome of the joint prefeasibility study regarding a 40,000 barrel-per-day (BBL/d) GTL plant based on Sasol's proprietary technology that would be used to produce high quality transportation fuels from the country's major domestic natural gas reserves. Sasol's general manager, Lean Strauss, said that the country had about 60 trillion cubic feet of gas reserves and that a typical GTL plant requires on 3 trillion cubic feet of gas per year. The project is expected to move into the full-feasibility study stage within the next six months.

To date, Uzbekistan's domestic oil production has covered local consumption, but production volumes are falling. Sasol anticipated that the country would soon become a net importer of oil and saw that the country was motivated to produce its own transportation fuel. Enhancing local fuel production will make a significant contribution to the economy of Uzbekistan through foreign direct investment and job creation.

In addition to pursuing a number of new GTL projects globally, Sasol's $7 billion Oryx project, a joint venture with Qatar Petroleum, is nearing its production design capacity of 34,000 BBL/d after producing an average of 29,000 BBL/d in February. The Escravos GTL project in Nigeria, which has a production scale about the same as Oryx, is scheduled to begin operation in 2011.

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