Siseko Njobeni
5 September 2008
Johannesburg — PETROCHEMICALS group Sasol had reduced its interest in the Escravos natural gas-to-liquids project in Nigeria, from 37,5% to 10%, the company said yesterday.
As a result of the reduction in the interest, Sasol -- due to release its year-end results on Monday - has suffered an impairment of R362m in operating profit this year. The group said the impairment related to interest previously capitalised on the project.
Sasol said yesterday it and its partners in the project agreed that Chevron would buy an additional 27,5% interest, while Sasol retained 10%. The group did not indicate the value of the transaction.
Sasol said the reduction of its interest related to the rising costs of the project.
In May this year, the group said it expected the capital cost of the project to increase to $6bn and it was reviewing all factors that affected the project's economics.
Sasol GM for international energy Lean Strauss yesterday reiterated the group's commitment in the project.
"Sasol remains fully committed to the Escravos gas-to-liquids project, which continues to utilise our technology under licence, by providing our full range of technical and skills support," Strauss said.
Sasol said definitive deals would be finalised "in due course" and would be subject to regulatory approvals.
The 34000-barrels-a-day project's construction schedule has been delayed. The completion date has been shifted to 2011 from a previous start-up date of 2010. Escravos is among various projects Sasol has embarked upon recently.
It is ramping up production at the Oryx gas-to-liquids project in Qatar, where it is in a joint venture with Qatar Petroleum.
Last week it announced it would proceed with a feasibility study on the 80000-barrels-a-day coal-to-liquid project in China's Ningxia Hui Autonomous Region.
Sasol this week announced plans to start exploring for hydrocarbons in Papua New Guinea next month after acquiring a 51% interest in four hydrocarbon prospecting licences in the country.
Sasol closed at R380,50 on the JSE yesterday, up 0,13%.
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