Energy and chemicals group Sasol has given fresh assurances that it remains committed to its home country, despite a major investment push into the gas-flush US market.

In fact, CEO David Constable used the company’s recent results presentation to unveil plans for an initiative known as ‘Project 2050’, which he says is designed to sustain and expand its integrated value chain in Southern Africa until at least the middle of the century. But he also defended the group’s globalisation strategy, which came under attack recently from the South African Communist Party (SACP), which described it as a disinvestment from South Africa.

SACP general secretary Blade Nzimande said Sasol had moved ahead with its US investment in breach of a ‘gentleman’s agreement’ reached between Sasol and the National Treasury in 2007, whereby it committed to investing in a third coal-to-liquids refinery in return for the scrapping of plans for the introduction of a windfall tax.

Speaking following the release of strong financial results for the year to June 30, which were underpinned by record operating profits from its South African energy cluster, Constable said Sasol’s commitment to the region remained firm and that its US invest- ment plans would not weaken that com-mitment.

He even argued that its future investments in the region could well be larger than the $16-billion to $21-billion that the group is gearing up to invest in the US between 2014 and 2020, and that accelerating gas to liquids (GTL) growth internationally was but one of five strategic drivers.

Improving and expanding its existing asset base in Southern Africa had also been identified as a key strategic priority, with several projects, collectively clustered under the Project 2050 banner, either under investigation or in the process of being implemented.

The life-extension plan will hinge materially on the securing of sufficient coal and gas feedstock to sustain the Southern African assets. But Sasol is optimistic that there is sufficient coal in the Secunda area to continue until at least 2050, and it is also hoping to introduce more gas from domestic or regional sources.

The group currently imports gas from southern Mozambique through a pipeline linked to its facilities in South Africa. However, it is unlikely to move entirely to gas, owing to the economics and logistics associated with its Secunda facility. The group has approved investments of R14-billion for the development of the Impumelelo and Shondoni collieries, which will replace coal from Sasol Mining’s older mines – the new mines should begin producing in 2014 and 2015 respectively.

Constable also stresses that, in 2013, 59% of its R32.3-billion in capital investment was directed towards South African projects and that the country would continue to receive the bulk of its investment in the coming two years – the group expects to invest R42-billion into capital projects in 2014 and R50-billion in 2015.

That said, Sasol also confirms that it has secured investment incentives collectively valued at around $1-billion from the state of Louisiana, in the US, to support its proposed development of an ethane cracker and a GTL facility in the Lake Charles area.

The JSE-listed group expects to make a final investment decision on a 1.5-million-ton-a-year ethane cracker, which could involve an investment of between $5-billion and $7-billion, during 2014 and for the project to be operational by the end of 2017.

It is also likely to move into the front-end engineering-design (FEED) phase for a 96 000 bl/d GTL facility later this year. The GTL project, which would be developed in two phases, could involve an investment of between $11-billion to $14-billion.

Both projects are premised on the availability of low-priced gas, which has become available in the US, owing primarily to the large-scale adoption of hydraulic fracturing to exploit shale gas reserves.

Head of global chemicals and North American operations André de Ruyter tells Engineering News that the incentives have been negotiated with Louisiana Economic Development, the agency responsible for facilitating investment into the state.

The incentives offer payroll and industrial land tax relief. In addition, the state is collaborating with Sasol to support the construction of a training centre and is working with the company to facilitate the permitting process, without alter-ing any of the requirements.

The schemes are conditional on Sasol meeting specific employment thresholds and investment schedules. “So, it’s an overall package and it is depend-ent on Sasol meeting all of its investment commitments,” De Ruyter outlines.

“We have estimated that [the incentives] are north of $1-billion in total value – so not net present value – over the life of the project.”

Sasol has also confirmed that, following a review of its project portfolio, the US projects should proceed to the FEED stage, and will be prioritised ahead of its initial plans for a GTL plant in Canada.