10 June 1999

Chevron and Sasol signed an agreement to create a new global joint venture founded on gas-to-liquids (GTL) technology. The agreement, signed on June 9 in Johannesburg, South Africa, is a very promising prospect for the development of clean fuels.

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 (GTL) 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 Sasol's experience in the Fischer-Tropsch technology. Sasol operated several GTL plants which manufactured commercial liquid fuels in South Africa during economic embargo periods.

The joint venture would utilize proprietary technologies of both companies, including Chevron's ISOCRACKING™ and Sasol's Slurry Phase Distillate Process.

Source: Chevron