UPDATE 2-Sasol seeks buys and partners in natural gas strategy
* Company diversifies into chemicals, gas and clean energy
* FY headline EPS up 25 pct to 42.28 rand
* Turnover up to 169.4 billion rand from 142.4 billion.
* Synfuels output at 7.2 mln tonnes (Recasts with natural gas plans, adds details and background)
By Agnieszka Flak
JOHANNESBURG, Sept 10 (Reuters) - South African petrochemicals group Sasol Ltd plans to pursue its natural gas-focused strategy through further acquisitions or by partnering with other producers to convert their gas into fuel or chemicals, a senior official said on Monday.
Sasol is the world's top maker of motor fuels from coal, but has increasingly been diversifying into chemicals, gas and clean-energy projects, partly to align itself with wider moves to low-carbon systems and to benefit from low gas prices.
"We are looking in particular at North America because that is still the hottest gas province in the world, but we won't make gas acquisitions at any cost," Andre de Ruyter, a senior group executive, told Reuters.
Beyond buying assets, the company may partner with producers to convert their gas into fuel or chemicals, he added.
Sasol is betting on the relatively cheap price of natural gas compared with crude oil, hoping to feed cheap gas into plants that convert the product into fuels that can be sold at higher prices.
It expects such price differentials for some time yet.
Sasol posted a 25 percent rise in yearly headline earnings per share to 42.28 rand ($5.18), boosted by a 17 percent rise in the average crude oil price and an 11 percent softer average rand/dollar exchange rate.
A weaker rand is positive for South African exporters as it lifts profits when overseas earnings are brought home. Sasol said any 10 cent change in the annual average rand/dollar exchange rate impacts its operating profit by 800 million rand.
Headline EPS is the main profit gauge in South Africa and excludes certain one-time items. Full-year turnover rose to 169.4 billion rand from 142.4 billion.
Sasol's capital expenditure reached 29.2 billion rand in the year through June and the company plans to raise that to 32 billion this financial year and 34 billion the following year. Increasingly its focus is on gas.
GAS TO LIQUID
The company is already conducting feasibility studies to build three 48,000 barrels-per-day gas-to-liquid (GTL) plants in North America, one in Canada and two in the United States. Sasol is also working on an engineering study for a GTL plant in Uzbekistan.
"The company is shifting gears. These plants, should they go ahead, will be the future," said Sasha Naryshkine, an analyst at Johannesburg brokerage Vestact.
Sasol will also pursue shale gas in South Africa after the government lifted a moratorium on exploration, although it may take a decade before the country produces shale gas at a commercial scale given the nascent nature of the domestic industry.
The group is also in talks with consortiums who found gas in neighbouring Mozambique, offering them an alternative to risky and expensive liquefied natural gas plants, de Ruyter said.
"We can demonstrate that we have the ability to monetise the gas by either turning it into fuel or chemicals. We are engaging with a number of parties," he said.
Output of synthetic fuels was 7.2 million tonnes and the company said it expected production at that unit to improve to between 7.2 and 7.4 million tonnes in the current year.
"The best performing segment, as per usual, is the synfuels business, which is obscenely profitable," Naryshkine added.
Sasol said it expects crude oil and product prices to remain volatile in the near term, while the rand will remain one of the biggest external factors impacting its profitability.
The company said it would pay a final cash dividend of 11.80 rand per ordinary share, up from 9.9 rand the previous year.
The stock, down nearly 3 percent so far this year, was up 2.9 percent at 385 rand by 1342 GMT, compared with a 0.3 percent fall in the JSE Top-40 blue-chip index. ($1 = 8.1661 South African rand) (Editing by Ed Stoddard and David Holmes)
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