Sasol weighs Mozambique opportunities

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SasolGasMozambique Reuters.

Johannesburg - South African petrochemicals group Sasol may be interested in buying into the gas blocks offered for sale in Mozambique's lucrative Rovuma basin if the deals are “appropriate”, its chief executive said on Monday.

Recent discoveries have put Mozambique in line to eventually compete as a major provider of liquefied natural gas to Asia.

Anadarko Petroleum and an Indian billionaire plan to auction a 20 percent stake in their Mozambican field, while China National Petroleum Corp is in talks to buy a stake in the block operated by Italy's Eni.

“We are interested in looking at what we might do with some of the owners of the Rovuma basin blocks, what their needs are and how we might be able to help them monetise the gas with our technologies,” Sasol CEO David Constable told Reuters.

“We would certainly be interested in taking a look at it, both upstream and downstream.”

Sasol is the world's top maker of motor fuels from coal, but increasingly has been investing in plants that convert gas to fuel and chemicals. The company would like to use that expertise when partnering with future gas producers in Mozambique.

Constable said he also met with Mozambique's president to discuss possibilities for Sasol, which has been operating in the country since 2004, to develop domestic gas-based industries.

The company is conducting engineering studies for a 96,000 barrels-per-day gas-to-liquids (GTL) and chemicals facility in the United States and an integrated ethane cracker complex there, while a GTL project in Canada has been put on hold.

Sasol's capital expenditure for the financial year to the end of June is forecast at 32 billion rand ($3.51 billion), rising to 35 billion the following year.

The firm said it may issue another dollar-denominated bond later this year or in 2014 after a successful issue last year.

MID-YEAR EARNINGS RISE SLIGHTLY

Sasol reported a 2 percent rise in first-half headline earnings per share to 24.01 rand ($2.63), in line with its own forecast for a 0-5 percent increase. Headline EPS are the main profit gauge in South Africa and exclude certain one-time items.

Its earnings benefited from an improved performance at its operations, higher sales and an 11 percent weaker rand/dollar exchange rate . The boost was largely offset by a marginally weaker oil price and depressed chemical prices.

A weaker rand is positive for South African exporters as it lifts profits when overseas earnings are brought home.

Operating profit was negatively impacted by one-off charges totalling 3.6 billion rand, including a writedown in the value of its investment in Arya Sasol Polymers Company (ASPC) in Iran, which the group plans to divest from.

Sasol said it would deliver an improved operational performance for the full year, but warned that the exchange rate remained the biggest external factor impacting profitability.

“We estimate that a 10 cents change in the annual average rand/dollar exchange rate will affect our operating profit by approximately 860 million rand,” Chief Financial Officer Christine Ramon said.

The company declared an interim dividend of 5.70 rand a share, the same as the previous year.

The stock, up 11 percent this year, was up 0.62 percent at 405.48 rand by 13:43 SA time, compared with a 0.34 percent rise in the JSE Top-40 blue-chip index. - Reuters


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