Sasol Set for Aussie GTL Project and $200 Million Base Oil Oryx Expansion in Qatar

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Pieter Cox, Chief Executive of Sasol, said March 7, 2005, that it could only be a 'matter of time' before an agreement was reached between the company and the Australian government on the establishment of a gas-to-liquids plant in the country. He said that Sasol (NYSE:SSL) (Johannesburg, South Africa), with its gas-to-liquids partner Chevron, saw Australia as the next possible place to build this type of plant, as part of the company's plans to produce 600,000 bpd of liquid fuels from natural gas by 2016. He added that this level of production would equate to the output of four of Sasol's giant Secunda plants.

Meanwhile, at the fifth Doha Conference on Natural gas in Qatar, Pat Davies, Sasol's Chief Executive elect, and Mark Nelson of Sasol-Chevron signed a contract with Abdullah Bin Hamad Al Attiyah of Qatar's ministry of energy to build and operate a new $200 million plant in Qatar to produce high quality base oils from natural gas.

The new facility will produce a range of high quality base oils, which will be primary feedstock for high quality lubricants. Production is due to start in the first half of 2008 and will introduce Qatar to the new base oils industry. ChevronTexaco (NYSE:CVX) (San Ramon, California) will supply the technology for the base oils project through its Isodewaxing process. The new plant will be part of the Oryx project.

In Johannesburg, Pieter Cox said the world's first GTL plant outside South Africa, the $900 million Oryx GTL in Qatar, was on track for commissioning in the first quarter of 2006, and the major contract for the construction of its Escravos GTL plant in Nigeria would be awarded in the next two months with production expected to start in 2009.

Cox said that Sasol had been looking at opportunities in Iran for some time, as the country had large natural gas reserves but presented significant risk. He said that Sasol would watch political relations between Iran and the U.S. very carefully.

He did not rule out new GTL plants in South Africa or Mozambique, depending on the outcome of Sasol's exploration for natural gas off the coast of Mozambique.

Sasol is also known to be in the initial phase of project discussions with the Chinese on two coal-to-liquid projects in Ning Xia and Shaan Xi provinces where the two plants would need an investment of $3 billion each and have a combined production of 1.2 million bpd (equivalent to 8 Secundas). For related news item see February 1, 2005 - Shenua's Research Breakthrough Spurs Pace of Coal to Liquid Projects in China.

With its lead in technology combined with experience in the gas and coal-to-liquids fields, Sasol is probing for new projects to keep ahead of the field and other technologies in a sector, which could provide the company with massive 'clean fuel' growth through 2020. For related news item see March 18, 2004 - Technology Driven Sasol Steps Up Fuel Diversification Effort with Global Coal, Natural Gas, Gas-To-Liquids, and Downstream Projects

Concentrating on core activities Sasol has withdrawn from 27 poorly performing chemicals businesses over the past eighteen months and may reconsider its investments in Condea in Europe, which it bought for $8.3 billion four years ago when the South African Rand was weaker against the dollar. Condea uses oil derivatives as inputs and has been hit by oil price rises. Cox said that the company would have 'to take another look' at Condea if the oil price remained above $40 a barrel.

Overall, the company's chemical division was a major contributor to the 65% increase in group profit to $1.05 billion in the six months July - December 2004 period over the corresponding period in 2003. The increase was driven by a 49% rise in oil prices and was achieved in spite of a $270 million bite taken out of the operating profit in the period, owing to the strength of the South African Rand against the U.S. Dollar. Total turnover was up 29% in the six months, to $5.44 billion.

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