Oct 21, 2011
Sasol confident about advancing growth opportunitiesBack
Sasolburg|European CO|Oryx GTL|Petronas|Sasol|Talisman Energy|Uzbekneftegaz|Zacks|Africa|Canada|Mozambique|Norway|Qatar|South Africa|United States|Uzbekistan|GTL Facility|Oryx GTL Plant|Abundant Natural Gas Resources|Foreign Oil|Gas Acquisition Strategy Gain Momentum|Gas-to-liquids|Given Petrochemicals|Natural Gas|Oil And Gas|Supply Gas|Transport|Farrel Creek|Azhar Abbas|Bobby Jindal|Christine Ramon|Dato|Ernst Oberholster|Alberta|British Columbia|Calcasieu Parish|Louisiana|GTL Technology
© Reuse this
This is in agreement with Sasol CFO Christine Ramon’s statement during the group’s 2011 full-year results presentation in September that Sasol’s strong balance sheet would position the company well to fund its growth opportunities.
In the financial year ended June 30, the group posted earnings attributable to shareholders of R19.8-billion, a 24.5% increase on its earnings of R15.9-billion the year before.
Further, it reported a low balance sheet gearing of 1.3% for the 2011 financial year, compared with 1% in the 2010 financial year, owing to improved cash flow generation.
The group generated R38.6-billion in cash from its operations, a 41% increase on the R27.3-billion generated in 2010.
Sasol expects to maintain this low gear- ing in the short term, but says its gearing will return to within the group’s targeted range of between 20% and 40% in the medium term, as its large capital-intensive growth programme and gas acquisition strategy gain momentum.
The group plans to grow its synthetic fuel output to between 7.2-million tons and 7.3-million tons a year in 2012.
Sasol already produces synthetic fuels (synfuels) at its joint venture Oryx GTL plant, in Qatar, but plans to continue expanding its GTL operations.
In line with this, the group signed an investment agreement with oil and gas companies Uzbekneftegaz and Petronas, on September 19, to open the way for the front-end engineering and design feed of a 1.4-million-ton-a-year GTL project in Uzbekistan.
The deal offers the GTL project investment protection and fiscal benefits.
It was signed by Uzbekistan’s Foreign Economic Relations, Investment and Trade Minister, following a meeting between President Islam Karimov and Sasol CEO David Constable.
The feed phase of the GTL project is expected to start before the end of this year.
Should an investment decision be made, the plant could be operational in the second half of the decade and would harness Uzbekistan’s abundant natural gas resources to produce transport fuels that the country currently imported.
Uzbekneftegaz, which has a 44.5% interest in the project, would supply gas from the already developed Shurtan group of gasfields and has also signed an offtake agreement for the bulk of the production. Sasol also holds a 44.5% interest, while Petronas has an 11% interest.
Petronas president Dato’ Shamsul Azhar Abbas expressed the Malaysian group’s support for the partnership.
The signing followed on Sasol’s announcement that it was moving ahead with a feasibility study for a 48 000 bl/d to 96 000 bl/d GTL facility in the US state of Louisiana.
The feasibility study, which was announced jointly by Louisiana Governor Bobby Jindal and Sasol new business development MD Ernst Oberholster, will take 18 months to complete and will evaluate the viability of a GTL venture in Calcasieu Parish, Louisiana.
Should it proceed, Sasol would apply its GTL technology to convert Louisiana’s abundant natural gas resources into fuel to be consumed in the US, which is keen to reduce its dependence on foreign oil.
Meanwhile, Sasol continues to make progress on a GTL project in Canada.
It is advancing a feasibility study for the GTL facility, which could be built in either Alberta or British Columbia, in western Canada, following its recent R14.2-billion acquisition of 50% of Talisman Energy’s Farrel Creek, as well as half of Talisman’s Cypress A shale gas assets, in the Montney basin, of British Columbia.
The South African company has pro- duced more than 1.6-billion barrels of liquid fuels and chemicals, primarily from coal, over the past 60 years, but is focusing on producing more synfuels from gas.
Sasol agrees that climate change presents a risk to the world at large, to South Africa and to the local and international business community, and reports that it is committed to engaging with the South African government in its development of a national policy to mitigate climate change.
The national policy is aimed at ensuring a coordinated, coherent, efficient and effective response to this challenge, without prejudicing the country’s growth and development goals and the competitiveness of key industries within the South African economy.
The group states that it is a significant contributor to the South African economy and that it plays a key role in ensuring energy security for the country; however, Sasol also recognises that it is a large emitter of greenhouse gases (GHGs) and has made changes to its business operating methods to move to a lower carbon economy.
Through investments in energy effi- ciency and in finding and using natural gas from Mozambique, Sasol reduced its yearly GHG emission levels by ten-million tons between 2004 and 2011, which is a reduction of 12%.
Meanwhile, Sasol New Energy has undertaken studies related to various clean energy and low carbon electricity initiatives, including the generation of electricity from natural gas in both South Africa and Mozambique, as well as the establishment of concentrating solar power facilities to produce electricity in South Africa.
Sasol New Energy obtained approval from the Sasol board to construct a 140 MW electricity generation plant in Sasolburg, South Africa. The plant will use natural gas as its feedstock.
In July 2010, the company also concluded an agreement with Gassnova, a Norwegian State-owned enterprise, to enable Sasol to participate in the European CO2 Technology Centre, in Norway. Construction is progressing and the facility is scheduled for start-up in the latter half of 2012.
Competition Law Compliance
Meanwhile, Sasol reports that it continues to evaluate and enhance its compliance programmes and controls, in general, and its competition law compliance programmes and controls, in particular.
As a consequence of these compliance programmes and controls, including monitoring and review activities, the company has also adopted appropriate remedial and mitigating steps, where necessary or advisable, lodged leniency applications and made disclosures on material findings as and when appropriate.
It notes that these compliance activities have already revealed competition law contraventions or potential contraventions in respect of which, the company reports, it has taken or will take appropriate remedial or mitigating steps, including lodging leniency applications.
Sasol initiated a global competition law compliance drive in 2008 after it was fined R3.7-billion by the European antitrust watchdog for anticompetitive behaviour by Sasol Wax in the European paraffin wax industry.
Sasol’s penalties for breaching competition laws since 2008 amounted to R4.06-billion, by March 2011, not including possible fines arising from unfinished competition probes.
Increased investigations of competi- tion breaches by the South African authorities followed, leading to Sasol’s decision to cooperate with the authorities under their policy of corporate leniency.
It has since paid R250-million to conclude charges involving Sasol Nitro and R112-million regarding breaches by Sasol Polymers, which Sasol says are technical in nature.
South Africa’s Competition Commission is conducting investigations into the South African piped gas, coal mining, petroleum, fertilisers and polymers indus- tries. Sasol reports that it continues to interact and cooperate with the commission, as well as in the areas that are subject to the commission’s investigations.
Edited by: Chanel de Bruyn© Reuse this Comment Guidelines
Other Sasol and Synfuels News
South African petrochemicals company Sasol's 2012 annual integrated report has received an award for its level of transparency from report monitoring, scanning, scoring and rating company ReportWatch at its 2013 Best Annual Reports 2013 awards. The corporate watchdog...
Integrated energy and chemicals company Sasol’s R1.3-billion C3 stabilisation project, in Secunda, is on track to begin commercial operation, scheduled for the middle of 2014.
A further 160 line items have been added to piping distributor and services provider Rare’s supply contract with petrochemicals company Sasol. The contract for the supply of all the group’s carbon steel pipes, fittings and flanges at its Sasolburg and Secunda...
Updated 25 minutes ago A rebound in manufacturing production, specifically in the motor vehicles and components subsectors, as labour relations normalised, made a significant contribution to South Africa’s economic growth rate of 3.8% during the fourth quarter of 2013, the South African...
Updated 52 minutes ago The National Union of Metalworkers of SA (Numsa) will demand a double-digit wage increase, deputy general secretary Karl Cloete said on Wednesday. "They [the demands] are developed against the backdrop of high cost of living and the heavy socio-economic burden...
Updated 1 hour 23 minutes ago Tower Property Funds’ flagship property, the Cape Quarter, in Cape Town, is set to undergo an “extensive greening transformation” as part of the fund’s greening and occupancy cost-reduction strategy. The fund, which listed under the JSE’s new real-estate...
Recent Research Reports
Automotive 2014: A review of South Africa's automotive sector (PDF Report)
The report provides insight into the business environment, the key participants in the sector, local construction demand, geographic diversification, competition within the sector, corporate activity, skills, safety, environmental considerations and the challenges...
Construction 2014: A review of South Africa's construction sector (PDF Report)
Construction data released during 2013 hints at a halt to the decline in the industry during the last few years, with some commentators averring that the industry could be poised for recovery. However, others have urged caution, noting that the prospects for a...
Electricity 2014: A Review of South Africa's Electricity Sector (PDF Report)
This report provides an overview of the state of electricity generation and transmission in South Africa and examines electricity planning, investment in generation capacity, electricity tariffs, the role of independent power producers and demand-focused initiatives,...
Defence 2013: A review of South Africa's defence industry (PDF Report)
Creamer Media’s 2013 Defence Report examines South Africa’s defence industry, with particular focus on the key players in the sector, the innovations that have come out of the defence sector, local and export demand, South Africa’s controversial...
Road and Rail 2013: A review of South Africa's road and rail infrastructure (PDF Report)
Creamer Media’s Road and Rail 2013 Report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move...
Liquid Fuels 2013 (PDF Report)
Creamer Media’s 2013 Liquid Fuels report examines South Africa’s liquid fuels market, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing,...
This Week's Magazine
This month’s roundup includes details of TSX- and NYSE-listed Alderon Iron Ore’s power purchase and security agreement with Newfoundland and Labrador Hydro for the Kami iron-ore project, in western Labrador; US aluminium refiner and products manufacturer...
Creamer Media’s Electricity 2014 report provides insight into South Africa’s electricity generation, exploring the issues of State-owned power utility Eskom's generated power, coal supplies, electricity tariffs and demand-focused initiatives, as well as the...
This month’s report includes details of junior miner Papillon Resources’ mining permit for its flagship Fekola gold project, in Mali; the Waterberg Coal Company’s feasibility on the development of an opencast mine, in Limpopo, to produce ten-million tonnes a...
A structured approach, wherein managers personally engage at each level of the project, is necessary to mitigate delays to the workflow on mega construction projects, says State-owned Eskom Kusile power station projects GM Abram Masango. The 4 800 MW Kusile power...
Construction of transmission lines to evacuate power from a regional hydroelectric project in East Africa, which was hanging on the balance following the withdrawal of financing by key partners, is now back on track. After six months of uncertainty, the African...