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Sasol's earnings may decrease by R1.9 billion
Business Report noted that the delay of the full commissioning of the group's Oryx gas-to-liquid plant in Qatar may decrease Sasol's earnings in the next financial year by R1.9 billion.
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Sasol -- update on Oryx joint venture
The Oryx gas-to-liquids (GTL) venture in Qatar, in which Sasol has a 49% shareholding, has now been operational for more than three months. During this initial start-up period all systems, process units, including the three main technologies, have been successfully tested and have demonstrated design intent. This bodes well for our strategic ambition to grow our business through GTL projects worldwide. Products that meet specification are being produced and the first consignment was shipped to market during April. As to be expected with a facility of this size and complexity, the plant has experienced start-up operational challenges, most of these limited to individual pieces of equipment.
Operating rates are currently also limited to levels lower than planned. The biggest challenge preventing ramp-up to the planned production rate is a higher than the design level of fine material that is produced in the process and which then has to be handled downstream of the Fischer-Tropsch units. This fine material is constraining the overall throughput of the downstream units. A number of possible causes for this have been identified and plans are in place to eliminate or remedy these over the coming months. The installation of additional downstream equipment as a back-up solution to increase throughput has already been initiated and this will be available for implementation towards the middle of 2008.
Based on prior experience Sasol was fully confident that the abovementioned challenges will be overcome but in the interim they will unfortunately prolong the ramp-up period. Until the production of fine material is reduced, the Oryx joint venture will only generate a marginal cash contribution. An update on Oryx's performance will be provided at an appropriate time, but no later than Sasol's year end results presentation in September 2007.
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Sasol -- contemplates plants in China
According to Business Report, Bloomberg reported that Sasol would decide late next year whether to invest approximately USD14 billion in two refineries in China which could produce 80 000 barrel's a day.
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Sasol -- repurchase of shares
Sasol Investment Company (Pty) Ltd, a wholly owned subsidiary of Sasol, had repurchased 7 504 819 ordinary shares in the share capital of Sasol Ltd as at 30 April 2007, at an average price of R233.00. This equates to 1.20% of the total issued share capital of Sasol. Sasol will be active in the market repurchasing its shares in accordance with its share repurchase programme, as and when considered appropriate. Authorisation for the repurchase of shares was granted by Sasol's shareholders at the annual general meeting held on 23 November 2006. A further update on the share repurchase programme will be given when 3% of the total issued share capital of Sasol has been repurchased.
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Sasol -- hedges 45 000 barrels per day
Sasol announced that it has entered into hedging transactions (zero cost collars) for 45 000 barrels of oil per day (equivalent to approximately 30% of its South African synfuels production) for its 2008 financial year, which commences 1 July 2007. In terms of this hedge, Sasol has achieved an average floor price of USD62.40 per barrel (based on monthly average dated Brent crude oil prices) on the hedged portion of production, and conversely Sasol will forego the upside on the hedged volumes, should the monthly average dated Brent price exceed USD76.80 per barrel.
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