business review

Sasol Synfuels International
(Proprietary) Limited

Business review  After several years of extensive groundwork by SSI, Sasol’s new era of international synfuels ventures is now within reach. In July 2001 approval was given for the start of front-end engineering and design (FEED) for the Qatari and Nigerian GTL plants.

Sasol Chevron joint venture established  The 50:50 Sasol Chevron global joint venture was finalised in October 2000 and an office has since been established in London. The joint venture’s mission is to foster the development of a GTL industry and global markets for GTL fuels by designing, building and operating plants around the world to manufacture and market premium-grade, alternative fuels and their associated products.

Sasol Chevron will pursue commercial applications of GTL technology for selected Chevron- and Sasol-held reserves of natural gas, as well as third-party gas reserves and those host countries seeking opportunities to monetise their gas reserves.

Nigerian venture advances  Foster Wheeler Energy in the United Kingdom has commenced full-scale FEED for the plant being developed in the Escravos Delta region of southern Nigeria. The plant, to be established on Chevron Nigeria’s established production site, will have a daily GTL fuel and naphtha production capacity of about 34 000 barrels (bbl). The plant is due to be commissioned in 2005.

The Nigerian project will cost about US$1 300 million. The Nigeria GTL plant is a major natural gas initiative by the project asset owners, the Nigerian National Petroleum Corporation (NNPC) (25%) and Chevron Nigeria Limited (CNL) (75%). It will unlock significant environmental benefits by beneficiating, rather than flaring, the associated natural gas that accompanies the crude oil being produced by CNL and NNPC. CNL will operate the plant on behalf of its partners.

Established to take advantage of the parent companies’ cutting-edge GTL capabilities, Sasol Chevron will provide the Nigerian GTL plant with licensed technology, operations management and technical services. The new joint venture will also market the GTL fuel, suitable for use in diesel engines, as well as the naphtha products. Daily production could increase from 34 000 bbl to 120 000 bbl within the first 10 years of operation.

Sasol is providing risk-based financing, based on project performance, to Chevron for about 50% of the capital costs of developing the new Nigerian plant.

Qatari venture progresses  The GTL plant at the port town of Ras Laffan in north-east Qatar will also have a daily production capacity of about 34 000 bbl: 24 000 bbl of GTL fuel suitable for use in diesel engines, 9 000 bbl of naphtha and 1 000 bbl of liquefied petroleum gas (LPG). The plant will use natural gas from Qatar’s huge North Field reserves at a rate of about 330 million standard cubic feet per day. This plant is also due to be commissioned in 2005.

Qatar Petroleum and Sasol are executing the US$30 million FEED phase with Foster Wheeler Energy as the selected FEED contractor. FEED will take about nine months to complete. It will be followed by a five-month bidding phase for the engineering, procurement and construction (EPC) contract. The project has an instantaneous cost of about US$800 million, including site, pre-production and contingency costs. Qatar Petroleum (51%) and Sasol (49%) are seeking project finance for a significant portion of the project’s capital requirements.

Infrastructure and project integration benefits offered by Qatar Petroleum’s Ras Laffan site, as well as improvements made to the SPD process, have added significant value to the project since the exploratory discussions began between the joint-venture partners in 1996.

Other opportunities under review  Beyond the Qatari project and Sasol Chevron’s extensive scope as a new global joint venture, SSI continues to investigate the viability of establishing other international Fischer-Tropsch ventures based on alternative hydrocarbon feedstocks such as coal, petroleum coke and heavy residues.

The new Sasol and Engelhard joint-venture catalyst plant at De Meeren in the Netherlands has been completed on schedule and within budget. Engelhard Corporation, the manufacturing partner, will in the year ahead commence production of the high-performance Fischer-Tropsch catalyst for the Sasol Slurry Phase reactors that will be used in the GTL plants in Nigeria and Qatar.

Prospects  SSI, working closely with Qatar Petroleum, will continue to advance the development of the GTL plant at Ras Laffan in the year ahead. Sasol Chevron will continue to progress the development of the GTL plant at Escravos. The extensive Qatari and Nigerian investments are likely to start contributing to Group profits as from the 2006 financial year. Sasol Chevron is also expected to advance its exploratory discussions and feasibility studies in Australia with a view to developing another GTL project.