R/€ = 14.26
R/$ = 10.43
Au 1233.55 $/oz
Pt 1365.00 $/oz
Mar 17, 2006
Sasol plans R8,5bn capital expenditure in next six monthsBack
Engen|Sasol|China|Equatorial Guinea|Gabon|India|Qatar|South Africa|United States|USD|Chemicals|Gas-to-liquids Activities|Oil|Oil Equivalent|Oil Reserves|Pat Davies
© Reuse this Synfuels and chemicals company Sasol expects to spend R8,5-billion on capital projects in the next six months, the bulk of which will be in South Africa, Sasol CE Pat Davies has revealed.
Announcing an 86% increase in attributable earnings to R7,3-billion in the first half to December 31, 2005, Davies said that Sasol had spent R6,1-billion on capital projects in the period, 77% of it on projects in South Africa.
He expected to spend another R8,5-billion in the second half of the year.
Sasol planned to nurture and grow its South African assets, particularly its synfuels business, which it would like to see growing by 20% in the next ten years and had plans to achieve that, Davies said – but he was also excited about the company’s gas-to-liquids activities in Qatar, was upbeat about coal-to-liquids in China and would be visiting India this month, also on the coal-to-liquids potential. If one took only 10% of the coal reserves of China and converted those into oil-equivalent, it would equal the world’s proven oil reserves, he said.
China, thus, had all the oil it needed and South Africa the technologies to turn that coal into oil equivalent, which made the Chinese as excited about the coal-to-liquids prospect as Sasol was.
What was envisaged were 80 000-bpd-size plants, two at that size giving China Secunda-type capacity.
The company was undertaking two prefea- sibility studies in the US, encouraged by the US’s new Energy Policy Act.
Southern Gabon exploration continued to do well, but exploration in Equatorial Guinea was under review.
At home, the polymers project, Turbo, was suffering both internal-rate-of-return reduction and schedule pressure, costs hit by currency effects and lateness mainly the result of under-performance of engineering and construction contractors, for whom there were more jobs globally than there was capacity to carry out assignments.
Sasol had slipped its Turbo schedule, the bene-ficial operation of the two polymers plants shifting out the polyethylene plant to the third quarter and the polypropylene plant to the fourth quarter of this calendar year.
The cost of the polymers plant had risen to $9,1-billion and the total cost of Project Turbo, including the fuels portion, had risen to R14,3-billion, 7% higher than the numbers last revealed.
Overall, the cost was up 17% when the original cost estimate was compared to the current cost.
It was cold comfort that the cost surge was in line with global trends, a study of large projects showing overspends of 30% or more being common and schedules overshot by 30%.
Davies described Sasol’s gas effort in Mozam-bique as “a great business”, the company already being in a position to accommodate up to 183-million gigajoules a year, up from the current 120-million.
Sasol would also be exploring offshore, for which an environmental-impact study was in place. It had received approval from the Nigerian government to enter a second deep-water block, which already had a significant oil discovery.
“We are in a world that is energy hungry; oil prices are high and people are concerned about energy security,” Davies said.
That put Sasol in a “very sweet spot” because Sasol was producing the same automotive fuels that were in such high demand and Sasol was able to satisfy that need without having to use expensive crude oil, but far cheaper feed-stocks, such as coal and natural gas.
Davies said Sasol was disappointed by the Competition Tribunal’s prohibiting its merger with Engen and the consequent ruling out of the impowered Uhambo joint venture. It was in discussions with Petronas and its empowerment partners as to the way forward and would be making an announcement in the near future.
Edited by: Martin Creamer© Reuse this Comment Guidelines
Other News This Week News
Updated 2 hours 35 minutes ago The South African Nuclear Energy Corporation (Necsa) and its subsidiary Pelchem on Thursday launched Phases 3 and 4 of their multipurpose fluorochemical pilot plant (MFPP) at the Necsa site, in Pelindaba. Phases 1 and 2 of the project, aimed at producing commercial...
Updated 2 hours 57 minutes ago The resumption of trading in telecommunications group MTN’s broad-based black economic-empowerment (BBBEE) scheme – MTN Zakhele – has been delayed until December 17, as the group continued to add capacity and retest the system. The online trading platform,...
Updated 3 hours ago The South African Communications Forum (SACF) on Thursday praised Cabinet’s decision to include a control system for set-top boxes (STBs) in subsidised decoders. Cabinet on Wednesday put to bed the hotly contested issue of STB control by approving the use of a...
Recent Research Reports
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,...
Projects in Progress - Second Edition (PDF Report)
Creamer Media’s second Projects in Progress supplement considers some of the major project developments under way, including high-profile energy and transport projects, as well as a few of the lower-profile public and private developments. What remains apparent is...
Water 2013: A review of South Africa’s water sector (PDF Report)
Creamer Media’s Water 2013 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Canadian Mining Roundup for June 2013 (PDF Report)
The June 2013 roundup includes details of the development of TSX-V-listed Aldridge Minerals’ flagship Yenipazar polymetallic project, in Turkey; the Canadian Nuclear Safety Commission’s renewal of Cameco’s uranium mining licence pertaining to the Cigar Lake...
This Week's Magazine
As US car maker Ford on Thursday unveiled its new Mustang on the global stage, Ford Motor Company of Southern Africa (FMCSA) announced that local fans can look forward to seeing the iconic pony car in local showrooms in 2015. The new Ford Mustang has been redesigned...
MAN Truck & Bus South Africa (SA) has opened a new R180-million parts distribution centre (PDC) in Germiston, Gauteng. The new facility, located roughly four kilometres from the company’s Isando headquarters and the OR Tambo International Airport, has been designed...
Does crime, political enemies or shady business deals make you a little bit nervous? Looking for an armoured sports-utility vehicle (SUV)? Mercedes-Benz has the product for you. The new R2.3-million ML500 Guard vehicle has been unveiled in South Africa. The M-Guard,...
A joint venture (JV) company created by South Africa’s Denel defence industrial group and the United Arab Emirates (UAE) group Tawazun has won a R5-billion contract for precision guided munition (PGM) systems for the UAE Air Force. The JV is Tawazun Dynamics and it...
A dry flue-gas desulphurisation (dry FGD) system uses a lime-based reagent to remove sulphur oxides (SOx) from the flue gases of any combustion installation without using water, says gas and energy specialist engineering company Tractebel Engineering South Africa...