INSIGHT: New liquid opportunities for Sasol

12 September 2007 17:53  [Source: ICIS news]

By Nigel Davis

LONDON (ICIS news)--Growing gas-to-liquids and coal-to-liquids as well as chemicals are the main planks of Sasol's strategy.

Africa’s largest chemicals maker has to capitalise further on its core coal and gas conversion technologies as it has done for many years.

Chemicals are as big a part of that plan as anything else.  

Increasing oil demand can bring further opportunities for growth upstream and with it the expected “sweet spot” for GTL and CTL projects that attract most attention. 

Coal-to-liquids technology will be important to countries like India and China – and there are further opportunities in South Africa.

Sasol’s future growth plans rest on these core technologies but there are risks associated with bringing big projects like the troubled Oryx gas-to-liquids plant in Qatar on-stream.

Sasol is confident that the chemistry and its technology will work but it has run into process problems, particularly with fine material from the reactor running through the process.

Oryx will be the showcase of Sasol's technology, CEO Pat Davies stressed this week. The plant is now just about within its design range and both trains will run for the first time in October.

Single trains have produced up to 12,000 bbbl/day of diesel. Oryx is expected to contribute to Sasol’s operating profits in the current financial year.

Progress is being made too on the China GTL plant but this is still in the in the pre-feasibility phase, Sasol said on Monday. Construction is underway on the GTL plant in Nigeria.

Project Turbo, which includes a catalytic cracker and downstream polymer units, is up and running, Davies said.

Sasol did well last year, producing record results in the high oil price environment. Its chemicals business had a good year too, after a difficult fiscal 2006.

Polymer prices were up 16% and solvents prices up 12% which helped compensate for higher raw material costs.

Full year polymer profits were up 32% and solvents profits up 27% despite lower volumes due to maintenance work on the company’s synfuels units. Profits were up strongly for both the wax and nitro businesses.

Sasol decided finally in fiscal 2007 to keep olefins & surfactants but underlying O&S results were down by almost a quarter over the full year. The first phases of restructuring of O&S have seen plant closures in Baltimore in the US and Porte Torres in Italy.

Sasol is understandably cautious about chemicals for fiscal 2008 and expecting product prices and margins to soften alongside US dollar-based refining margins.

The company must be encouraged, however, that its big Turbo project plants are now operating and that the Arya Sasol cracker in Iran has finally started up after such lengthy delays.

The two polymer units associated with the Iran cracker are likely to be producing material in the first quarter of 2008.

Apart from the Qatar, China and Nigeria GTL plants the big project news from Sasol this week was that it is looking at an inland 80,000 bbl/day coal-to-liquids venture with the South African government, project Mafutha. The debate over whether the country really needs a project that could cost upwards of R50bn ($7bn) has begun.

The coal-to-liquids idea adds another dimension to the company’s project portfolio. Synfuels capacity will rise by 20% under current plans mainly using additional gas from Mozambique.

Sasol has been though a difficult period but the sky-rocketing oil price has underscored the attractiveness of its technology overseas and at home. Sasol’s trick in chemicals will be to hold on to margins in the products derived from its liquid streams.

By: Nigel Davis
+44 20 8652 3214

< previous article(VIDEO - ICIS news Europe Lunchtime Bulletin 30 October 2009)

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly