Sasol seeks more gas to boost synfuels

2010-12-22 14:44

Johannesburg - Petrochemicals firm Sasol [JSE:SOL] is looking for more gas across Africa and beyond to boost its production of chemicals and synthetic fuels, but may also feed it into power plants if the economics make sense.

South Africa is trying to boost power supply to prevent a repeat of a 2008 electricity crunch, but wants to cut its carbon emissions by reducing its current reliance on coal.

"There is an emerging awareness that gas into power generation is a clean alternative," said Ebbie Haan, managing director of its Sasol Petroleum International (SPI) subsidiary.

"But as companies start to explore for frontier areas, it gets more risky, it gets more expensive," he told Reuters. "And then if you need to transport long distance, it's about the tariff and the kWh."

SPI, which manages upstream oil and gas exploration and production for the petrochemicals group, is the only gas producer in Mozambique, extracting gas from the onshore Pande and Temane fields in the Mozambican basin.

The unit, which has annual capital expenditure of $200-$250m, is spending $400m on upgrading the facility to increase annual capacity to 450 million standard cubic feet from 300 million by the middle of next year.

Mozambican Basin

It is also looking for gas in the offshore part of the southern Mozambican basin, hoping for discoveries similar to US oil and gas firm Anadarko Petroleum's finds in Mozambique's northern Rovuma basin.

"The offshore area is going to be a totally different game and we hope that, although potentially it is riskier and significantly higher cost than onshore, it will yield significant future resources," he said. "The promise is there."

SPI would also like to get involved in Rovuma, either by joining other firms there or buying gas from future producers.

Haan said future plans for Mozambique may include a power plant or a chemicals or gas-to-liquids plant.

SPI is also looking at east and north Africa, and sees promise in exploration in Papua New Guinea and Australia.

With a focus on gas rather than competing with oil majors, it is also considering selling some of its upstream oil assets in Nigeria, now at the exploration/appraisal stage.

"Some of them, we are brokering at the moment," Haan said.

Sasol said on Monday it would pay $1.03bn for half of Talisman Energy's Farrell Creek shale gas assets, and may build a gas-to-liquids plant in Canada.

The company is also exploring for shale gas in South Africa's Karoo basin although any production is at least 10 years away.

"It's a long shot, but it could be a game-changer," he said.