South Africa: Sasol Upbeat On Qatar Plant's Quick Returns
Business Day (Johannesburg)
June 7, 2006
Posted to the web June 7, 2006
allafrica.com
Carli Lourens
Doha
The gas-to-liquids plant developed by Sasol and state-owned Qatar Petroleum launched in Qatar yesterday would be so profitable that it would pay for itself in only two-and-a-half to three years, said Sasol.
This was probably the fastest period of return Sasol had seen on any of its projects to date, said CE Pat Davies.
He said the internal rate of return was about 30%.
The Oryx plant, built at a cost of $950m to convert some of Qatar's massive natural gas reserves into fuels such as diesel, was expected to reach full production of 34000 barrels a day in six months to a year. Sasol owns 49% and Qatar Petroleum owns 51%.
If successful, the project was expected to spark major investment in gas-to- liquids projects in Qatar and other gas-rich parts of the world. Davies said interest in the technology could "skyrocket".
Soaring oil prices had made the project substantially more viable since the first sod was turned in a desert area north of Doha four years ago.
The project would be viable even if oil prices fell to about $15 a barrel, said Lean Strauss, group CE at Sasol's international energy business. Oryx is the first modern gas-to-liquids plant in the world and the largest of its kind. Shell has a much older gas-to-liquids plant in Malaysia, producing 12000 barrels a day.
Davies said Qatar Petroleum wanted to see if the Oryx project was successful before it gave the go-ahead on plans to expand the plant to 100000 barrels a day.
He said Sasol would probably be able to say whether the project was successful after about six months.
Davies described the technology risk on the project as "very reasonable", pointing out that several banks provided $675m of the project funding.
SasolChevron, a joint venture between the two companies, would market the fuel produced at Oryx.
Contracts with buyers of the fuel had not yet been finalised, but these could be wrapped up by about August, he said.
The fuel would initially be sold in Europe. SasolChevron was expected to charge a premium for the fuel, as it was cleaner and delivered higher performance than fuel made from oil.
Strauss would not indicate what the premium would be, but said bids from companies looking to buy the fuel had been higher than expected.
Sasol said it expected to make an announcement on the disposal of its European Condea business in August. |
