press release

Chevron Press Release - Chevron and Sasol Launch Global Joint Venture

Firms capitalize on synergies to implement worldwide gas-to-liquids ventures worldwide

SAN FRANCISCO, Oct. 16, 2000 -- Chevron and Sasol today announced the signing of final agreements for the creation of a new company, Sasol Chevron Holdings, as part of their 50/50 global joint venture founded on gas-to-liquids (GTL) technology -- one of the 21st century's most promising prospects for clean fuels development. The companies initially announced their intention to expand their GTL activities to a worldwide scale in June 1999.

The new company intends to implement gas-to-liquids ventures worldwide, anticipating investments totaling in excess of (U.S.) $5 billion over the next five to 10 years.

George Couvaras of Sasol was named chief executive officer and Mark Koelmel of Chevron was appointed chief operating officer.

Signatories to the joint venture documents on behalf of the two companies included Richard Matzke, vice chairman of Chevron Corp., and Patrick Davies, executive director of Sasol.

"We're excited about the long-term growth potential of this unique global joint venture and proud to be working with a well-respected company like Sasol," said Matzke.

"Worldwide, there are trillions of cubic feet of stranded natural gas reserves for which there is no market because of their geographic location," said Matzke. "Given the support for the global joint venture by our future government partners, we see GTL technology as an important key to unlocking those resources."

The venture is built on the foundation laid by Sasol, a leader in state-of-the-art Fischer-Tropsch technology. It will utilize proprietary technologies of both companies -- Chevron's ISOCRACKING® and Sasol's Slurry Phase Distillate Process -- and draw on Chevron's strengths and resources in international upstream gas development and production, and both parties' technical strengths and experience in marketing premium GTL products.

Sasol Chevron Holdings will actively pursue application of GTL technology for selected Chevron and Sasol reserves of natural gas, for third-party gas reserves and on behalf of host countries seeking to monetize their gas reserves. In addition, it will foster the development of a GTL industry and global markets for GTL fuels, and will design, build and operate plants throughout the world to manufacture and market premium environmentally friendly fuels and products.

The Nigerian National Petroleum Corp. (NNPC) and Chevron Nigeria Ltd have joined to bring a 33,000 barrel-per-day plant on stream by 2005. The Nigeria Escravos gas-to-liquid (EGTL) project, announced Sept. 8, is to be the first GTL project in which the global joint venture will be involved. The global joint venture will support EGTL through the supply of management services, operations, and expertise. This marriage of South African, Nigerian and U.S. interests will promote closer economic ties and development between the three countries.

Utilization of the GTL technology has the potential to reap a double-environmental benefit: GTL products are expected to set new global standards for premium high-performance, environmentally friendly fuels. Secondly, GTL technologies facilitate monetization of gas that is produced in association with oil, thus eliminating the need to flare gas in areas where there is no infrastructure or commercial market.

GTL fuels contain virtually no sulfur and no aromatics, resulting in substantially lower hydrocarbon, carbon monoxide, nitrogen oxide and particulate emissions when compared with conventional fuels. They also have a performance advantage, with cetane values that are significantly higher than conventional diesel.

Commenting on the environmental benefits, Peter Robertson, president of Chevron Overseas Petroleum Inc., said, "We anticipate that the advent of the 21st century will see both profitable and expanded capability to convert natural gas into premium environmentally friendly fuels." He noted that with more and more countries adopting rules for cleaner-burning fuels, demand for GTL products will significantly increase.

"With Chevron as our global joint venture partner, the opportunities for improving and geographically expanding GTL technology are enhanced tremendously," said Pieter Cox, managing director and chief executive officer of Sasol Limited, noting the many synergies between the two companies. "Joining hands on GTL development projects throughout the world will enable the alliance to accelerate implementation of a number of GTL ventures, and achieve the strategic international growth objectives of both our companies," he added.

Notes to editors:

Information on Chevron and Sasol

The Escravos Gas Plant (Nigeria): This first Escravos gas project marked Chevron Nigeria Limited's (CNL) commitment to eliminating flaring in Nigeria. Developed through a separate joint venture and commissioned in 1998 by CNL (operator) and the Nigeria National Petroleum Corporation, the Escravos Gas Plant is Nigeria's first commissioned plant dedicated to utilizing natural gas produced in association with crude oil. When all phases are complete, the EGP will ensure a reliable supply of clean, processed gas to domestic and regional markets and will provide feedstock for EGTL.

Chevron's GTL project in Nigeria: Chevron and NNPC have announced they plan to build a GTL products plant adjacent to Chevron's Escravos Gas Plant (EGP) in Nigeria. Preliminary design and engineering have been completed on the Nigeria GTL facility, which will be capable of converting natural gas into synthetic crude oil for further processing into commercial products -- principally high-quality naphtha products and premium fuels.

Area of Mutual Interest (AMI): Sasol and Chevron have entered into an AMI agreement covering certain parts of West Africa which will provide opportunities to jointly grow their upstream activities and provide additional resources for the global joint venture's GTL operations. It will also promote economic ties and development of natural resources with the African countries concerned.

The Slurry Phase Distillate (SPD) process is a Sasol proprietary process for converting reformed natural gas (called synthesis gas or syngas) into waxy syncrudes. Utilizing technology from Haldor Topsoe, a Danish company, methane, the main component of natural gas is mixed with oxygen and a catalyst to create a mixture of carbon monoxide and hydrogen called synthesis gas, or syngas. In a Slurry Phase reactor, the synthesis gas is heated to about 450 degrees Fahrenheit (240 degrees Celsius) and mixed with another catalyst to form various liquid hydrocarbons (called Fischer-Tropsch conversion), yielding condensates and waxy syncrudes.

ISOCRACKING is a Chevron proprietary process used to upgrade waxy syncrudes, by separating heavier molecules, which are usually solid at room temperature, then rearranging them so they become liquid. This process yields a lighter, premium fuel, such as synthetic fuels and naphtha, that contain virtually no sulfur, little nitrogen or carbon monoxide.

Company Information: SASOL: Sasol, established in 1950, is a world-leader in the commercial production of liquid fuels and chemicals from coal and crude oil. The company has annual sales of $2.8 billion and is listed on the Johannesburg Stock Exchange (SOL), with a market capitalization of $4 billion, and on the NASDAQ (SASOY).

With 50 years of experience with GTL technologies, Sasol manufactures more than 200 fuel and chemical products at its plants in Sasolburg and Secunda in South Africa, as well as at several other plants abroad. The company's products are exported to more than 70 countries. Sasol has developed world-leading technology for the commercial production of synthetic fuels and chemicals from low-grade coal as well as via the conversion of natural gas to environment-friendly fuels and chemicals.

Company Information: CHEVRON: Chevron, the second largest integrated petroleum company in the United States, is headquartered in San Francisco. As of year-end, 1999, the company had $40.668 billion in total assets and reported net income for the year of $2.070 billion, up 55 percent from the previous year. Earnings before special items for 1999 were $2.286 billion ($3.47 per share, diluted), up 18 percent from the $1.945 billion ($2.96 per share, diluted) in 1998.

Chevron is involved in all aspects of the energy business: exploration, production, manufacturing, transportation, marketing and research. Shares of Chevron stock are traded principally on the New York, Pacific and Midwest Stock Exchanges.

Sasol / Chevron Global Joint Venture

Gas-to-Liquids Fact Sheet

Sasol and Chevron -- Linking Capabilities

There is good alignment between Sasol's corporate strategy for global deployment of Fischer-Tropsch (F/T) technologies and Chevron's plans for growth. We feel there are many potential synergies between the two companies that make this opportunity exciting and beneficial to both parties. For example:

  • The joint venture will market high performance, environmentally friendly fuels suitable for use in conventional diesel engines and fuel cells.
  • Sasol's F/T technology and Chevron's ISOCRACKING technology offer a unique combination of world class technologies to establish GTL as a successful, global business;
  • The cooperation between the technology groups of Chevron and Sasol will ensure that their joint GTL activities remain state of the art and world class.

Chevron's international upstream and downstream technologies, experience and resources, combined with Sasol's F/T technologies and experience, opens up new options and markets for dealing with uneconomic gas and potentially enables the exploration and development of gas reserves world-wide, especially in areas with no gas infrastructure or markets.

Purpose of the Joint Venture
  • The JV will market high performance, environmentally friendly fuels with virtually no sulfur, no aromatics, and cetanes of ~70. (Normal diesel fuels have cetanes of 45-50.) These fuels will set a new standard in the industry;
  • The JV will actively pursue the application of GTL technologies for appropriate Chevron gas reserves, Sasol gas reserves, third party gas reserves and on behalf host countries seeking to monetize their gas reserves;
  • The JV will design build and operate the GTL plants and market the products produced;
Details of the Global Joint Venture
  • The Global Joint Venture is called Sasol Chevron Holdings and is a 50/50 joint venture.
  • The new company is based in Bermuda, but JV services will be provided from London and will be lead by a Chief Executive Officer, George Couvaras, from Sasol and a Chief Operating Officer, Mark Koelmel, from Chevron.
  • For queries, the joint venture can be contacted at the following address: 43-45 Portman Square, London, U.K. W1H OAN.
What is Gas-to-Liquids

As we intend to use it, it is a 3 step process which:

  • Converts natural gas to synthesis gas;
  • Converts synthesis gas to a waxy synthetic crude, using Sasol's Fischer-Tropsch technology; and
  • Upgrades the synthetic crude to premium fuel products, using Chevron's hydroprocessing technology
Environmental Impacts of an Alliance

Utilization of this GTL technology has the potential to reap a double environmental benefit. GTL products are expected to set a new global standard for high performance, environmentally friendly fuels, which are suitable for use in conventional diesel engines and fuel cells. GTL fuels have virtually no sulfur and no aromatics, resulting in substantially lower hydrocarbon, carbon monoxide, nitrogen oxide, and particulate emissions when compared to conventional diesel fuels. Secondly, GTL technologies facilitate monetization of gas that is produced in association with oil thus eliminating the need to flare gas in areas where there is no existing infrastructure or commercial market.

Economic and Environmental Benefits
  • It takes gas that is currently flared or lacks a market and produces a premium, environmentally friendly fuel, creating a double environmental benefit of reduced CO2 emissions and reduced urban pollution in end-product markets like Europe.
  • It provides an opportunity to generate additional jobs and revenue for both Africa, the likely site of the first GJV plant, and other countries in the region and the world.
  • New Technology: There is a considerable amount of new equipment, engineering expertise, and management technology that will be incorporated with these projects. This provides a training source for the workforce and an avenue to increase their skills and competitiveness in the world market.
  • Infrastructure Development: Major projects provide new infrastructure facilities such as the development or expansion of: shipping facilities and ports, communication systems, and transportation systems.
  • African Trade: The project would contribute to the strengthening of commercial relations between Africa and the world.

Updated: October 2000