| Wed 15 Jun 2005, 10:14 | | Sasol banks on gas-to-liquids for growth |
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Sasol banks on gas-to-liquids for growth
June 15, 2005
By James Macharia
Johannesburg - Fuels group Sasol expected its gas-to-liquids (GTL) division to contribute 30 percent to its earnings within 10 years, from zero currently, its chief executive said yesterday.
Pieter Cox said in an interview that Sasol hoped to double its bottom line in the next 10 years, driven in large part by the nascent GTL business, which he saw as a prime driver of the group`s expansion.
`In the next 10 years, GTL will contribute 30 percent of Sasol`s bottom line and a large component of global growth going forward,` Cox said.
`GTL is making no contribution at the moment, but in the next 10 years we hope to double our bottom line, and half of that growth could be from GTL.` GTL technology converts gas into petroleum products including low-sulphur diesel that meets EU and US environmental rules.
Cox, who retires after eight and a half years as chief executive at the end of June, forecast Sasol`s GTL division would produce about 500 000 barrels a day within a decade, three times the output of its coal-to-fuels plant at Secunda, east of Johannesburg.
Sasol is the world`s top producer of synthetic fuel from coal. It also leads in the commercial production of GTL.
Apart from joint venture sites in Qatar and Nigeria, Sasol also plans a GTL project in Iran, Australia`s Northwest Shelf, and longer-term projects in Russia and Indonesia. Cox said Oryx, a joint venture with Qatar Petroleum, was on track to start output in early 2006.
`The fuel from coal or gas is much cleaner, has a high energy content and will be a much sought-after fuel because of environmental concerns, attracting a premium price,` Cox said.
Plans to launch coal-to-liquids projects in China were in early exploratory stages, but a go-ahead would be contingent on guarantees on protection of Sasol`s intellectual property.
Cox, whose firm`s profit has been knocked about in the past by a strong rand and the volatile oil price, saw a stable rand ahead.
`We will not see a dramatically weaker rand and it should be about 6.50-7.00 to the dollar in the next two to three years,` he said.
It was difficult to predict future oil prices, but with no new oilfield finds, rising production costs and other factors, the price of crude was likely to trend higher.
`We are assuming a level of $30 per barrel in our investment plans,` Cox said, referring to Brent crude.
Cox, who will take over as Sasol`s non-executive chairman next year, said acquisitions were not part of Sasol`s expansion plans because of vast greenfield opportunities globally.
No takeover offers had come Sasol`s way either, he said.
`We expect our capital expenditure to remain at about $2 billion [R13.5 billion] per year going forward, with a lot of it going into GTL,` he said.
Sasol`s share price lost 91c to
