Sasol made an interesting announcement yesterday stating that they are going to cancel a proposed Coal to Liquids (CTL) facility in Indonesia. The proposal was not even close to pre-feasibility so not too much of an impact on the share price. It does bring up some interesting questions though.
Sasol said that the decision was purely strategic as they look to shift from CTL to Gas to Liquids (GTL) because of better margins and less carbon emissions. Globally more and more shale gas is being discovered creating an increasing gap between the price of gas and the price of oil. Sasol are well positioned to benefit from an increasing oil price and a decreasing gas price and clearly want to shift their focus.
However it does raise some concerns about their future growth and the massive CTL plants they have planned in India and China (one of the reasons we invest in the stock). I'm not going to go into too much detail as we are currently doing a detailed analysis on the stock and will inform clients where to go from here in due course.