* S.Africa keen to develop shale gas industry
* Sasol wants to invest in the sector
By Ed Stoddard
JOHANNESBURG, March 10 South African
petrochemicals group Sasol Ltd is keen to invest in a
domestic shale industry once it gets off the ground, its chief
executive said, in a potential challenge to oil major Royal
South Africa's cabinet proposed new regulations to govern
exploration for shale gas late last year after it lifted a 2012
moratorium on the activity in the central Karoo region.
Fracking in the region might tap what is believed to be some
of the world's biggest reserves of the energy source and
the government wants to develop an industry that it sees as a
potential game-changer in Africa's largest economy.
"I am very excited because of the technologies we can bring
to the table. We've got shale gas upstream experience in British
Columbia," Sasol Chief Executive David Constable said on Monday.
"We want to get involved and participate and monetize that
gas in country with gas to liquid, gas to power, gas to
chemicals," he said after the group posted a 26 percent rise in
Shell has applied for an exploration licence and once all of
the new regulations are in place it is expected to be near the
front of the line.
Constable said Sasol wanted to take part. "We are really
interested in what is going in the Shell block and would love to
farm in or take a piece of it. Shell is issuing profit warnings
and pulling back capex right now," he said.
Shell said in January that it planned to cut capital
spending to $37 billion this year from $46 billion in 2013,
following a profit warning.
Shell was not immediately available to comment on Monday.
Constable said the government should take Shell's strategy
South Africa's Public Investment Corporation (PIC), which is
Sasol's biggest shareholder with a 13 percent stake in the
company and manages 1.4 trillion rand ($130.3 billion) in civil
servant retirement funds, has also said it wants a big slice of
the shale pie.
Fracking involves pumping pressurised water, chemicals and
sand underground to release gas trapped in shale formations and
the prospect of it occurring in the semi-arid and
sparsely-populated Karoo region, known for its big skies and
scenery, has raised concerns anong conservationists.
Constable said Sasol's experience in British Columbia would
enable the company to carry out the process "in an
environmentally friendly fashion."
EARNINGS, DIVIDEND UP
Sasol said headline earnings per share (EPS) for the six
months to the end of December increased 26 percent to 30.19
rand, in line with the group's trading update last month.
Earnings were lifted by a weaker rand currency and higher
Headline EPS is the primary measure of profit in South
Africa and strips out one-off items.
Operating profit was hit by one-off items including a 5.3
billion rand impairment on Canadian shale assets prompted in
part by poor prices in the North American gas market.
Sasol said it expected a slight strengthening in the rand,
which would hurt earnings for the rest of the financial year.
The company raised its dividend by 40 percent to 8 rand per
share, a record for a half-year payout.