Friday, 24 July 2009
Sasol, Petronas, and Uzbekneftegaz have entered into a three-way JV for the development of a GTL project in Uzbekistan with capital expenditure budgeted at US$2.5 billion.
This is Sasol's third international GTL project and it is expected that the plant to be developed in Uzbekistan could produce around 40 mbbl/day of diesel equivalent.
Sasol brings to the table their their proprietary Slurry Phase Distillate process which should be able to produce a clean burning diesel product that can be directly sold on its own or blended, according to an analysis by the Gerson Lehrman Group made on 22 July.
Assuming a 10 mcf to 1 barrel conversion rate, this plant should be able to handle 400 mcf/day of natural gas. With 2.3 tcf of gas production in 2007, Uzbekistan can really stand to benefit from converting some of this to diesel so that it can be transported easier, by truck or train east to China or by ship via passage of the Caspian Sea, the analysis says.
Further, the World Bank estimates that around 70 bcf of natural gas was flared in 2007 in Uzbekistan, which could be captured and processed via the GTL process either through the massive JV plant or even through smaller scale JV projects with one of the numerous GTL specific companies out there like Rentech, Velocys (now part of Oxford Catalysts), and Syntroleum.
Hopefully, neighboring countries like Kazakhstan will also encourage development of GTL projects. Given the current remoteness of various assets in Kazakhstan apart from the major five oil fields, flare gas volumes were very significant at 200 bcf in 2007, placing it number 5 on the World Banks' list of countries with greatest flare gas volumes.
200 bcf of flare gas put through the GTL process could produce 20 million barrels of diesel equivalent which means at current oil prices of US$60-$70, a similar US$2.5 billion project like the one in Uzbekistan could have its capex costs recouped in 2 years just from flare gas conversion alone, GLG notes.
A portion of those fines that the country hopes to collect from companies in violation of flare gas should also be devoted towards encouraging GTL projects in the country especially as more of the country's projected 100 tcf of natural gas reserves start to open up albeit probably in remote areas where it would be more economical to convert the gas to diesel equivalents that can be transported easier to pipelines and ports out to global markets, the analysis concludes.
