Sasol mulling several gas supply options as it seeks to reduce carbon footprint

28th October 2019 By: Terence Creamer - Creamer Media Editor

Sasol mulling several gas supply options as it seeks to reduce carbon footprint

Chemicals and energy group Sasol is investigating several gas-supply alternatives for its coal-heavy South African operations as it seeks ways to reduce its carbon footprint. The JSE-listed group is simultaneously working on a ‘sustainability roadmap’, which will have a strong focus on lowering its greenhouse gas (GHG) emissions.

CEO-designate Fleetwood Grobler tells Engineering News Online that a team of senior executives has been set the task of studying various gas-supply options, including those that could arise as a result of the development of liquefied natural gas (LNG) export infrastructure in northern Mozambique.

Sasol already imports natural gas by pipeline from southern Mozambique, where it has initiated further exploration activities in an effort to secure additional gas resources for use in its South African fuel and chemicals plants, as well as by other industrial users.

The company, Grobler says, is pursuing a multi-pronged supply strategy, rather than one tied to a single supply option.

“We are not betting on a single gas-supply solution. Rovuma is in play, our own exploration is in play, South African gas reserves are in play in the longer term and there is also the option of bringing in gas from elsewhere as more and more gas is found and LNG grows.”

The gas option is central to the group’s commitment to reduce its absolute GHG emissions from its South African operations by 10% by 2030 against a 2017 baseline.

Already the company has indicated that it will not pursue any greenfield coal-to-liquids plants and will also not pursue new gas-to-liquids prospects as it transitions from being primarily a producer of fuel in Southern African into a global chemicals producers.

This transition is epitomised by Sasol’s troubled Lake Charles Chemicals Project, where cost and schedule overruns led to the resignations of the previous joint CEOs Bongani Nqwababa and Stephen Cornell. Grobler has set the completion of the LCCP, which could now cost up to $12.9-billion, as his main priority for the first few months of his tenure.

Grobler stresses that any change to Sasol’s South African feedstock will take time, given that 90% of the feedstock at its main production site in Secunda remains coal. Its Sasolburg complex, however, is currently fully gas enabled.

“Coal remains the bedrock of our Secunda operations. So, if we want to change any feedstock, it will be a gradual process,” Grobler explains, indicating that the group is likely to first turn to alternatives such as gas and renewable energy for its utilities before transitioning to a new feedstock for the production of fuel or chemical products.

Grobler will also not be drawn on the future of its coal assets following the completion of an asset review, which identified which assets remained core and which would be sold.

The group has set a target of securing $2-billion from the sale of noncore businesses, but has, to date, only identified assets representing 20% of that divestment target.

These assets include the Optimal and Petlin plants, in Malaysia, the Lake De Smet land and coal reserves, in the US, as well as a heat-transfer fluids business and Sasol-Huntsman, in Germany. It is also in the process of selling its stake in explosives and an alcohol venture in China.

CFO Paul Victor says Sasol’s coal assets in South Africa remain integral to its business and that coal will remain part of its feedstock mix until at least 2050.

“Coal assets are still an integral part of Sasol’s future, it’s just the quantum that may be lower – maybe it’s not going to be 40-million tons, maybe it’s going to be slightly reduced. But we still see ourselves operating those coal assets one way or another, or having equity in them, at least until 2050.”