Gas to Liquids: Unlocking Value From Natural Gas Dragan Djakovic, Business Development Manager Texas A&M Gas and Fuels Research Initiative 28 March 2014
forward-looking statements Forward-looking statements: Sasol may, in this document, make certain statements that are not historical facts and relate to analyses and other information which are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies. Examples of such forward-looking statements include, but are not limited to, statements regarding exchange rate fluctuations, volume growth, increases in market share, total shareholder return and cost reductions. Words such as believe, anticipate, expect, intend, seek, will, plan, could, may, endeavour and project and similar expressions are intended to identify such forward-looking statements, but are not the exclusive means of identifying such statements. By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and there are risks that the predictions, forecasts, projections and other forward-looking statements will not be achieved. If one or more of these risks materialise, or should underlying assumptions prove incorrect, our actual results may differ materially from those anticipated. You should understand that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors are discussed more fully in our most recent annual report under the Securities Exchange Act of 1934 on Form 20-F filed on 9 October 2013 and in other filings with the United States Securities and Exchange Commission. The list of factors discussed therein is not exhaustive; when relying on forward-looking statements to make investment decisions, you should carefully consider both these factors and other uncertainties and events. Forward-looking statements apply only as of the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. 2
presentation outline about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 3
about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 4
Sasol at a glance An international integrated energy and chemical company The world s largest producer of synthetic fuels Pioneer in gas-to-liquids (GTL) and coal-to-liquids (CTL) technology 60 years experience in gas conversion related technologies In-house technology development capacity Strong intellectual property portfolio Joint venture partner with Qatar Petroleum in ORYX GTL 32,400 bpd GTL plant Turnover (US$20.5bn)1 Market cap (US$28.3bn)2 Listed on JSE (SOL) and NYSE (SSL) Exploration, development, production, marketing and sales operations in more than 38 countries ~35 000 employees worldwide Notes 1 For year ending 30 June 2013 2 Market capitalisation at 30 June 2013 Already a strong presence in the US 5
a history in synthetic fuels 6
a history in synthetic fuels 7
about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 8
gas to liquids (GTL) in a nutshell Product work-up GTL products Natural gas as feedstock Reforming GTL synthesis Diesel, naphtha, LPG Optional: kero, paraffins, base oils, waxes 10 mcf 1 barrel of product 1 bcf/d 100 000 bbl/day 1 tcf reserve 100 million bbl of products Over 30 years 9
GTL fuels can be supplied through existing supply infrastructure compatible with existing engine technology and fuelling infrastructure tankers existing fuelling infrastructure pipeline conventional engines 10
GTL is responsive to market demands transportation fuel demand (millions of oil-equivalent barrels per day) middle distillate is the fastest growing segment of the transport fuel demand GTL produces 65-75% of product in the middle distillate range, with the balance of the slate comprising chemical naphtha or added value chemicals, with no bottom of the barrel products Source: ExxonMobil Outlook for Energy (2012) 11
GTL raises the bar on quality and performance clear, clean burning fuels with high cetane number and no sulfur or aromatics can be used pure or in blends upgrades refinery streams and reduces constraints could enable development of new generation internal combustion engine technologies improved engine efficiency further reduction in tailpipe emissions naphtha is an ideal cracker liquid feedstock or diluent for oil sands bitumen 12
GTL reduces engine-out emissions 20 GTL diesel emissions vs EN590 reference diesel 0 CO 2 % difference -20-40 -60 PM NO x THC min max average -80-100 CO 13
GTL value addition 100 90 automotive diesel large fuels markets could sustain multiple world scale plants USGTL ~96,000 bpd 80 70 % plant yield 60 50 40 jet fuel Chemicals markets offer opportunities to add value 30 20 10 chemical naphtha base oils (Note: relative global market sizes and product values are approximate) waxes Product value 14
GTL can improve energy security (certain cases) diversifies transport fuels supply can reduce dependence on imported petroleum products 16000 US net imports of crude oil and petroleum products ( 000 barrels per day) 14000 12000 10000 8000 6000 4000 2000 0 ~100,000 GTL bpd ~ 1.5% of current USA net imports Jan-1973 Feb-1974 Mar-1975 Apr-1976 May-1977 Jun-1978 Jul-1979 Aug-1980 Sep-1981 Oct-1982 Nov-1983 Dec-1984 Jan-1986 Feb-1987 Mar-1988 Apr-1989 May-1990 Jun-1991 Jul-1992 Aug-1993 Sep-1994 Oct-1995 Nov-1996 Dec-1997 Jan-1999 Feb-2000 Mar-2001 Apr-2002 May-2003 Jun-2004 Jul-2005 Aug-2006 Sep-2007 Oct-2008 Nov-2009 Dec-2010 Jan-2012 Feb-2013 Source: EIA 15
GTL offers gas market diversity for resource owners traditional pathways for natural gas to remote markets or chemical conversion ORYX GTL, Qatar 16
the GTL value proposition is compelling alternative natural gas monetization option pathway for natural gas into transportation energy security products transparent to supply infrastructure high product quality relative to conventional equivalents product responsive to markets demands middle distillates and chemicals sound environmental credentials job creation fiscal revenue 17
about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 18
ORYX Qatar, Sasol s GTL flagship A joint venture with Qatar Petroleum 32 400 bbl/d nameplate capacity (GTL diesel, GTL naphtha, LPG) First cargo shipped to international markets in April 2007 A total of 56+ million barrels produced to date On-line availability has improved significantly, enabling stable, increased production nine months at 99+% on-line availability Highly profitable venture with handsome returns to shareholders 19
ORYX GTL (32,400 bpd) 20
other GTL projects in the pipeline Escravos GTL, Nigeria Joint venture with Chevron + NNPC 32 400 bbl/d Oryx look alike GTL diesel, naphtha, LPG OLTIN YO L GTL, Uzbekistan Joint venture with Uzbekneftegaz + Petronas 38 400 bbl/d enhanced Oryx GTL diesel, kero, naphtha and LPG 21
identified various levers to extract greater value Improving capital productivity Improving product value Driving technology improvement Across the fence utility supply Modularisation Partnerships and alliances Chemicals Electricity Base oils Reactor intensification Generation 3 FT catalyst Improvement in reforming technology 22
GTL reactor facts Height = ~170 ft (~50 m) Diameter = ~35 ft (~10 m) Mass = ~2,200 tons 23
scale up and intensification of GTL reactor Significant scale-up during successful commercialization at ORYX GTL Subsequent focus on intensification to increase production in essentially the same shell Enabled by: Integrated catalyst and reactor technology developments Intensive fundamental studies, model systems and semicommercial piloting Understanding critical design parameters and margins based on commercial operation enabled significant optimization US GTL design at 150% of ORYX GTL reactor capacity 24
about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 25
shale gas has changed the face of North American energy and chemical markets US dry gas (trillion cubic feet per year) 30 25 20 15 10 5 History 0 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 Source: EIA, Annual Energy Outlook 2011 11% 14% 20% 2009 9% 28% 8% 2% 9% Net imports Shale gas Projections Non-associated onshore Non-associated offshore Tight gas Coal-bed methane Alaska Associated with oil 1% 45% 8% 8% 22% 7% 1% 7% 26
e.g. natural gas imports/exports 2004 2014 Source: EIA Annual Energy Outlook 2004/2014 27
e.g. fuel mix for electricity generation 2004 2014 Source: EIA Annual Energy Outlook 2004/2014 28
paradigms have shifted 2004 2014 Source: EIA Annual Energy Outlook 2004/2014 29
GTL exploits the differential between gas and liquids pricing 40 Brent crude oil price ($/bbl) expressed as a multiple of Henry Hub natural gas price ($/mmbtu) 30 20 10 0 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 actual EIA (2013) 30
North America the new frontier for GTL 40 Brent crude oil price ($/bbl) expressed as a multiple of Henry Hub natural gas prices ($/mmbtu) 30 20 + 10 0 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037 actual EIA (2013) divergence between oil and gas prices established gas pipeline network attractive investment environment for GTL 31
about Sasol GTL value proposition ORYX GTL, Qatar the North American energy landscape Sasol s US projects 32
in December 2012 Sasol announced its decision to proceed with FEED for world scale cracker and GTL projects in Louisiana, USA Louisiana Governor Bobby Jindal & Sasol CEO David Constable FEED Announcement (December 3, 2012) 33
Sasol North America Lake Charles Chemical Complex 34
chemicals facility a world scale ethane cracker will produce approximately 1.5 million tons of ethylene per year which will be converted on-site by seven downstream to a range of high-value derivatives estimated project capital investment: US$ 5 billion to US$ 7 billion final investment decision: 2014 construction phase: 2014-2017 35
gas-to-liquids facility ~1 billion cubic feet per day of natural gas will be converted to 96,000* barrels per day of liquid fuels and chemicals including GTL diesel, GTL naphtha, liquefied petroleum gas, paraffin, GTL base oils and medium and hard waxes estimated project capital investment: US$ 11 billion to US$ 14 billion final investment decision: 2016 construction phase: 2016-2020 *nominal capacity 36
US GTL product marketing a Sasol wholly owned facility with a nominal capacity of 96 000 bbl/d wax products phase 1 oxygen natural gas natural gas reforming syngas sasol LTFT process reactor wax condensate wax extraction paraffin extraction fuels product work -up Process * LPG naphtha diesel debottleneck in Hamburg, Germany new emulsification units paraffins phase 2 oxygen natural gas natural gas reforming syngas sasol LTFT process condensate reactor wax Paraffin for LAB production paraffin fuels extraction product work -up Process * LPG naphtha diesel new LAB unit in Lake Charles minor modifications in Augusta, Italy base oils base oils * flexible design allows for operation in fuels only or value adds mode a balanced product portfolio of 29% chemicals and 71% fuels (by mass) 37
in summary GTL value proposition Arbitraging gas and oil - shale gas revolution Technology enhancements - extending our lead World class products Chemical value adds Integrated value chain Lake Charles World class infrastructure Supportive government Access to multiple markets Competitive labour and contractor market Abundant feedstock compelling investment opportunity 38
Thank you 39