R/€ = 15.31Change: -0.22
R/$ = 13.44Change: -0.17
Au 1166.92 $/ozChange: 2.76
Pt 997.00 $/ozChange: 4.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Sep 10, 2007

Sasol says gas-to-liquids problem 'solved', but project cost to rise by $50m

© Reuse this South African energy group Sasol claims to have substantially overcome the technical problems afflicting its high-profile Oryx gas-to-liquids (GTL) joint venture, in Qatar, success at which is viewed as vital to proving a technology that could offer a serious alternative transport-fuel source.

However, CEO Pat Davies revealed that the company would have to spend an additional $50-million, or five per cent of the project’s overall value, to improve the reliability of the "fixes" introduced at the facility – the plant was initially envisaged as a 34 000-bbl/d facility, with an associated capital cost of $950-million.

The facility began producing final product in January, but on May 22, the JSE and NYSE-listed group shocked the market when it admitted to experiencing technical difficulties as a result of higher-than-expected levels of fine material being produced in the Fischer-Tropsch process. This led to an immediate sell-off, which saw Sasol’s share price fall 5,47%, or R15,09 a share, on the day.

The group revealed that it was interrogating the cause and extent of the problem and that “back-up solutions” were being sought, but that these were likely to take until the middle of 2008 to finalise.

Sasol stressed throughout that the underperformance was not insurmountable, nor would it impact on its aspiration to apply the GTL technology elsewhere. But some speculated that the technology flaws where, in fact, deeper than acknowledged, with similarities even being made between Oryx and Mossgas.


Davies said on Monday that the levels of fine material (which had been choking the plant’s filters and, thus, preventing a ramp-up to full production) had been substantially reduced and that it was now targeting, for the first time, to begin operating both trains simultaneously in October.

But he refused to be drawn on when the plant would reach its nameplate output levels.

“We have now brought [the fines] down to just about the design range. So we are getting there and we have basically solved this problem. We will be installing a little bit of kit to ensure we improve the reliability on this,” Davies asserted.

He argued further that, while it was “not nice” to have to spend the additional $50-million required to improve reliability, “it is pretty insignificant in the grand scheme of things”.

“Sasol offers cutting-edge technology. But to get there, we have to take some risks. In return, our shareholders get a company that has a superior technology and returns. But, of course, that cutting edge sometimes becomes the bleeding edge and it hurts us a little bit,” Davis elaborated, noting that the group had over 100 PhDs in its employ, who “love challenges like this”.

“We are entirely confident that the technology works. We are entirely confident that Oryx is going to become the shop window for the gas-to-liquids industry that we said it would become,” Davies added.


This confidence was arguably reflected in the fact that that group was proceeding with its second GTL project in Nigeria, which was expected to start up in 2010.

Davies said that the construction of the Escravos GTL project was under way, but cautioned that the Nigerian construction market was challenging and difficult to predict.

The group again emphasised the importance of both its GTL and coal-to-liquids (CTL) technologies in providing a platform for its growth in Southern African and globally.

It was continuing to pursue opportunities for the technology in China, India, Australia, the US, and in Southern Africa. In South Africa it was in the early stages of planning for a new 80 000 bbl/d CTL plant, which would be located either in the Free State, or in the Waterberg.

Davies also stressed that, while others were also pursuing GTL, it remained the technological leader in the field, and was almost on its own in the advances it had made in the area of CTL.

Royal Dutch Shell was also pursuing a GTL project in Qatar, known as Pearl, which could produce 70 000 bbl/d. But there had also been reports of challenges with that project.


Davies argued that Sasol’s GTL and CTL technology platforms were still setting it apart, and could emerge as crucial to closing the inevitable supply gap that would emerge as oil resources dwindle and as demand from developing countries surged. He forecast that demand from India and China alone could add 17-million barrels-a-day to the world's demand profile, on top of the current 80-million.

“We want to use our technology to build hubs around the world . . . based on natural gas and coal, to grow our upstream business, our chemicals business and, of course, to grow our liquid fuels business,” Davies said, pointing out that South Africa had as much coal in “barrels of oil equivalent as Saudi Arabia has in oil”.

The idea is to take the very large reserves of available coal and gas, and convert these into transportation fuel, which comprises 40% of the world’s current energy demand.

Global growth consultancy Frost & Sullivan said on Monday that Sasol’s core technologies were becoming increasingly important as energy security concerns rise.

“Sasol has built its growth on technically complex technologies. Ensuring the robustness of these technologies will be crucial to the continued strengthening of its market value,” research analyst Jeannot Boussougouth noted.

Sasol's share close up R3,10 at R288 a share.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
Other Energy News
Article contains comments
The governing African National Congress (ANC) has emphasised the need for transparency and affordability when determining the “optimal energy mix” for South Africa, while also underlining the importance of economic and environmental sustainability. Delegates to the...
Tanzania has initiated a $1.33-billion project to pipe natural gas to its commercial capital, Dar es Salaam, and help relieve chronic power shortages in the city, the president's office said in a statement on Sunday. The 532 km (330 mile) Mtwara-Dar es Salaam...
The Organization of the Petroleum Exporting Countries' (Opec's) policy meeting in December will welcome Indonesia's return as a member, complicating a decision by the producer group on whether to change its oil output target. After refusing to cut output last year,...
Latest News
Rural Development and Land Reform Minister Gugile Nkwinti
Updated 1 hour 57 minutes ago Agri SA is calling for urgent clarification of the correct wording and interpretation of the governing party’s decision, whereby the 50/50 proposal, which requires farmers to hand over half their land to their workers, has been accepted as African National Congress...
Updated 2 hours 11 minutes ago South Africa should not be allowed to create new coal-fired power stations if it is to tackle its carbon emissions and meet the global goal of keeping temperature increases below 2 °C, says South African environmental and antinuclear organisation Earthlife Africa...
Updated 2 hours 15 minutes ago Integrated information and communications technology (ICT) systems provider Datacentrix has lifted earnings attributable to shareholders for the six months ended August 31, by 15.4% to R54.5-million and headline earnings per share (HEPS) by 14% to 27.7c, benefitting...
Recent Research Reports
Input Sector Review: Pumps 2015 (PDF Report)
Creamer Media’s 2015 Input Sector Review on Pumps provides an overview of South Africa’s pumps industry with particular focus on pump manufacture and supply, aftermarket services, marketing strategies, local and export demand, imports, sector support, investment...
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 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 infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
This Week's Magazine
Engen Driver Wellness, the mobile health awareness initiative, continues to make a tangible difference to the lives of the country’s bulk truck operators with increased driver participation in voluntary screenings and improved health scores. Now in its fifth year,...
BUSINESS LEADERS PANEL Adam Craker, Ivor Chipkin, Alan Hosking and Allon Raiz at the 6th IQ Business Active Growth conference
At the sixth IQ Business conference held in Sandton last month, a panel of business leaders and academics advocated that business reclaims the initiative to spur growth in South Africa amid fragmented and haphazard political direction. Management consulting firm IQ...
The building industry is an essential component of the South African economy as it contributes about 15% to the gross fixed investment that drives the economy. However, with the country’s economy going through a tough time currently, this, in turn, reflects on the...
The recipients of the 2015 South African National Energy Association (Sanea)/South African National Energy Development Institute Energy (Sanedi) Awards were announced at a ceremony and banquet in Sandton last month. Sanea chairperson Brian Statham named Exxaro CEO...
ASHER BOHBOT EOH’s corporate goals were originally aspirations, but the company is relevant and is making a difference in the territories it operates in
As South African information technology (IT) firm EOH posted another full year of strong growth, CEO Asher Bohbot, known for his frank words, people-centric management style and stoic humanism, attributed the company’s continued South African and African growth to...
Alert Close
Embed Code Close
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96