Sasol (SSL)

As countries across the world look to decrease their dependence on traditional oil, one of the most economical ways is to employ the coal-to-liquid fuel techniques that Sasol specializes in.

Sasol Ltd. acquired 51% equity in four exploration areas in Papua New Guinea (a total area of 37,000 square kilometers) in August 2008. Sasol announced that it will begin block drilling for natural gas in Papua New Guinea by the end of 2009. Sasol's vice president Martin Waterhouse also noted that Sasol will continue to expand its operations through strategic partnerships, similar to the partnership with Papua Petroleum Limited that will make operations in Papua New Guinea possible. Sasol has shifted its business model from securing and refining gas and liquid fuels mainly in South Africa, Mozambique, and West Africa, to exploring and drilling for natural gas. Increased natural gas production in Papua New Guinea is a major step in Sasol's growth as a natural gas supplier.

Oil has declined 70% from its high in the summer of 2008. Sasol hedges about 30% of its oil production, which in effect locks in revenues when the price of oil is above $228/barrel and below $90/barrel. The hedge protects revenue while Sasol engages in heavy capital expenditure, which will amount to a planned R15 billion in 2009-2010.

BEIJING, June 13 (Xinhua) -- South Africa's Sasol, the world's biggest producer of motor fuel from coal, and China's top coal company Shenhua Group will jointly produce motor fuel from coal in China in 2016, a Sasol official said Friday.

   Feasibility studies of two Coal to Liquids (CTL) projects in northwest China, jointly invested by Sasol and Shenhua, are going smoothly and expected to be completed by the end of 2009, said Sasol's chief executive officer Pat Davies at a press conference in Beijing. 
   The two projects, one in Shaanxi Province and the other in Ningxia Hui Autonomous Region, will each be able to produce 80,000barrels per day, or 3.4 million tons annually of diesel, naphtha, liquefied petroleum gas (LPG) and jet fuel.

Trevor Manuel has announced that the government will not impose a windfall tax on the synthetic fuels industry. The National Treasury in a statement said that it had been decided "not to proceed with a tax on the windfall profits earned by existing synthetic fuel producers in the interest of a conducive environment for additional investments in domestic fuel security”.

Sasol has extensive reserves (250mboe) ready to be recovered and processed and Sasol’s technological expertise gives it an advantage in competing for new projects—even against major multi-national energy companies.

Sasol’s revenue diversity protects it from some risks and the typically cyclical nature of the oil and gas industries.

Sasol has been growing globally with a few large international projects. It has major GTL projects underway in Nigeria and Qatar and recently announced a partnership with the Tata group in India.