Looking to invest in Energy? Try Sasol

Imagine a fuel made from gas, containing the same qualities as gasoline…and more, a fuel so ultra pure that it is one of the cleanest fuels available, a fuel that gives improved engine and environmental performance, a fuel that can be used in existing diesel engines…from ships, trucks and buses through to the family car. Welcome to the world of Sasol. Sasol Limited, a South African state owned global energy company is exploring new frontiers in the way we produce energy.

George Bush said recently that America is addicted to oil, a strong statement from a president seen as friendly to the oil & gas industry, but one forced to be proactive with the increasing oil prices. America may be addicted to oil, but the rest of the world is not far behind. People on the wrong side of the sanity line, will argue that we need to end the dependence on fossil fuels and see the oil industry as evil capitalists looking to make profits at the expense of the common man (but isn’t that what all companies do?) There has also been talk about a windfall profit tax, which any free market economist will tell you is both counterintuitive and counterproductive. I do not see an alternative to fossil fuels in the near future; I think the challenge will be to use existing fossil fuels in an innovative way. Fossil fuels are naturally occurring, and it is extremely difficult to come up with an alternative source which is as efficient and cost effective.

With the ever increasing costs of energy, it is only natural that talented scientists and engineers will come up with a solution that is a product of the free market. I have been looking at various existing methods of energy production and I believe the GTL (Gas to Liquids) technology offers the greatest potential for success. Sasol uses a proprietary GTL technology based on the Fischer-Tropsch process, taught in high school chemistry, to convert natural gas into environmentally friendly liquid fuels. The basic procedure (to a chemical engineer, a thermodynamic phase change!) is not revolutionary, but the way the process has been tweaked is path breaking. The significant benefit of the technology is the use of natural gas as feedstock, which is abundantly available in nature. It gives an opportunity for countries like Qatar and others of the erstwhile Soviet Union to reap the benefits of large natural gas reserves. The sucess of Sasol will lead to larger investments by the big oil companies in this gas to liquids technology, Chevron already has a stake in Sasol's GTL business.

I am not sure how the stock market views Sasol, the fact that it is state owned might be a hurdle to its future growth. I do not bet on the markets, but if I was a punter I would put my money on Sasol!