Sasol Ltd the largest producer of motor fuels made from coal and gas, agreed to pay CAD 1.05 billion for a stake in the Cypress A project in Canada, its second shale gas acquisition in less than three months. The deal is in line with Sasol’s plan of accelerating growth within its upstream resource base by way of the acquisition of high quality natural gas assets.

The purchase of 50 percent of Cypress A from Calgary-based Talisman Energy Inc should be completed in the third quarter. The company last week completed the CAD 1.05 billion acquisition of 50% of Talisman’s Farrell Creek operation. Both projects are in the Montney shale basin, in western Alberta and north-eastern British Columbia.

Mr Pat Davies Chief Executive Officer is giving Sasol a foothold in the North American shale gas market as he bets that gas-based projects will be more profitable than the company’s traditional business of producing motor fuels from coal. In 2007, he oversaw the start up of the world’s largest gas to fuels plant in Qatar.

Mr Abri du Plessis chief investment officer at Cape Town based Gryphon Asset Management said that “It’s positive that they’re acting so quickly on their strategy. He added that “One could probably expect further announcements in the next year or so.”


Sasol, which uses proprietary Fischer-Tropsch technology to convert gas into motor fuels, hopes to prove the feasibility of a gas-to-fuels plant processing the equivalent of 48,000 barrels a day in Canada in the second half of next year, the company said yesterday. Sasol will have about 10.4 trillion cubic feet of reserves in the Montney basin after the two transactions.

The combination of the Cypress A acquisition with the Farrell Creek project will allow “scalability” of a gas to fuels plant. Cypress A is producing at a rate of 18 million standard cubic feet a day, while Farrell Creek produces 50 to 60 million standard cubic feet a day.

(Sourced from Bloomberg)