press release

Chevron Press Release - Chevron and Sasol Pursue Global Gas-to-Liquids Joint Venture

Photo of Richard Matzke, Chevron Overseas Petroleum Inc. president, (right) and Pieter Cox, Sasol managing director and CEO

Richard Matzke, Chevron Overseas Petroleum Inc. president, (right) and Pieter Cox, Sasol managing director and CEO, signed the Memo of Understanding to create the gas-to-liquids joint venture.

JOHANNESBURG, June 9, 1999 -- In a ceremony today, Chevron and Sasol signed an agreement to create a new global joint venture founded on gas-to-liquids (GTL) technology, one of the most promising prospects for clean fuels development in the 21st century.

Richard Matzke, president of Chevron Overseas Petroleum Inc. and a director of Chevron Corp., and Pieter Cox, managing director and chief executive officer of Sasol Limited signed the Memorandum of Understanding on behalf of the two companies.

"Gas-to-liquids technology is so promising that its development could create an entire paradigm shift throughout the petroleum industry and reflects Chevron's strategy to grow our international business," said Matzke. "There are trillions of cubic feet of natural gas throughout the world, isolated from the traditional gas infrastructure and thus considered geographically too distant for economical development. We believe application of GTL technology will become the preferred method to commercialize such natural gas resources.

"The advent of the 21st century will see expanded capability to profitably convert natural gas into environmentally superior fuels, including no-sulfur diesel and naphtha products," said Matzke, noting that demand for these fuels will only increase in the future.

"We are optimistic that the new global partnership will also contribute to the realization of our first GTL joint venture project in Nigeria," said Matzke, referring to a proposal announced in April, 1998, in which Chevron and Sasol outlined plans to build a GTL products plant in Nigeria.

Design and engineering continue on the GTL facility, which will be capable of converting natural gas into synthetic crude oil for further processing into commercial products -- principally high-quality diesel and naphtha. The initial feasibility study has since been expanded to increase target production from 20,000 to 30,000 barrels per day. The plant is expected to come on stream in 2003.

"Equally important, this alliance has the potential to deliver market-based, economic solutions to reduce the need to routinely flare associated gas, creating what we see as a win/win/win situation," Matzke said.

The global joint venture would build on the foundation laid by Sasol, a leader in state-of-the-art Fischer-Tropsch technology and a company immersed in the advanced stages of feasibility studies for several GTL projects. The joint venture would utilize proprietary technologies of both companies -- Chevron's ISOCRACKING™ and Sasol's Slurry Phase Distillate Process -- and draw on the technical strengths each company brings to international upstream gas development and the production and marketing of GTL fuels. The alliance will not only take advantage of opportunities offered by each partner, but will also provide innovative GTL solutions for commercializing gas in worldwide applications. The experience and technology of both companies will contribute to reduced development costs and accelerate the use of GTL technology worldwide.

"We are excited about the myriad of opportunities made possible via a global arrangement with Chevron," said Cox. "There are numerous synergies between Sasol and Chevron that will enable the alliance to accelerate implementation of GTL ventures, and we are confident this joint venture will further strengthen Sasol's position as a leader in GTL technology," he added.


The proposed GTL plant in Nigeria would be built adjacent to the Escravos Gas Plant (EGP), developed through a separate joint venture and commissioned last year by Chevron Nigeria Ltd. (operator) and the Nigeria National Petroleum Corp. EGP -- Phase I, completed in 1998, is Nigeria's first commissioned gas plant dedicated to utilizing natural gas produced in association with crude oil. When all phases are completed, the EGP will ensure a reliable supply of clean, processed gas to feed domestic and regional markets, in addition to supplying the GTL plant.


Chevron and Sasol - Linking Capabilities

There is good alignment between Sasol's corporate strategy for their Fischer-Tropsch (F/T) technology 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:

  • Sasol's F/T technology and Chevron's ISOCRACKING™ technology offer a unique combination of world class technologies;
  • 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 technology, experience and resources, combined with Sasol's F/T technology and experience, opens up new options and markets for dealing with existing gas and potentially enables the exploration and development of gas reserves worldwide, especially in areas with no gas infrastructure or markets.

Purpose of the Joint Venture

  • The joint venture would actively pursue application of GTL technology for appropriate Chevron gas reserves, for third-party gas reserves and on behalf of host countries seeking to monetize their gas reserves.
  • The joint venture would design build and operate the GTL plants and would market the liquids produced.

What is "Gas-to-Liquids"

As we intend to use gas-to-liquids as a three-step process that:

  • converts natural gas to synthesis gas;
  • converts synthesis gas to a waxy synthetic crude, using Sasol's Fischer-Tropsch technology;
  • upgrades the synthetic crude to high-quality diesel and naphtha, using Chevron's hydroprocessing technology.

Environmental Impacts of an Alliance

Utilization of this GTL technology has the potential to reap a double environmental benefit. Currently, one of the most promising applications of the technology is in locations where gas is currently flared due to the lack of an economic alternative or gas infrastructure. Utilizing GTL in these areas would tremendously reduce the air emissions associated with gas flaring. Secondly, the process produces an environmentally superior diesel. There is no sulfur, and hydrocarbon, carbon monoxide, nitrogen oxide, and particulate emissions are substantially lower, compared with conventional diesel.

Economic and Environmental Benefits

  • It takes gas that is currently flared, and it produces an environmentally superior fuel, creating a double environmental benefit.
  • It provides an opportunity to generate additional jobs and revenue for both Africa 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 can be incorporated with these projects. This provides a training source for the work force and an avenue to increase the work force's 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: June 1999