South African energy giant Sasol has announced that it will divest from its gas-to-liquids (GTL) greenfields projects, including one based in Louisiana that was estimated to have a value of $13bn to $15bn.
“While our current GTL assets are generating good returns and cash flows, the value proposition for Sasol to build new GTL projects is uneconomic against a volatile external environment and a structural shift to a low oil price environment,” Sasol said.
Within the announcement, Sasol also revealed that it will be walking away from its Canadian shale gas assets after it took a $715mn loss on them last year, straining its 2016 earnings.
Having unveiled the strategy that the company will look towards in an attempt to drive future growth, it identified the Canadian shale assets as being non-core.
However, despite these divestures, the company will continue on with its currently 79% complete Louisiana-based ethane cracker project. The total investment required is estimated to cost $11.bn – the largest foreign investment by a South African company to date.
Once complete, the facility will create ethylene, a chemical product commonly used in the manufacture of plastics, from ethane.