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Sasol Announces Award of Joint Application with Statoil ASA and Chesapeake Energy Corporation

Sasol logo Sasol announces the award of a joint application with Statoil ASA and Chesapeake Energy Corporation for an onshore petroleum Technical Cooperation Permit in South Africa.

Sasol, through Sasol Petroleum International Pty Limited (SPI) the wholly owned upstream oil and gas subsidiary of Sasol Limited, today announced the successful award of a joint application with Statoil ASA and Chesapeake Energy Corporation for an onshore petroleum Technical Cooperation Permit (TCP) in South Africa.

The TCP covers an area of approximately 88,000km2, primarily located in the Free State and also covering areas in the Eastern Cape and KwaZulu-Natal.

The permit awards the applicants the exclusive right to study the prospectivity for shale gas in the Karoo Basin for a period of up to 12 months, but does not include any surface activity or drilling. The joint venture partners plan to evaluate existing and available geological information within the area to determine the potential for shale gas. The study work will include the sampling and analysis of existing geological cores that were drilled by Soekor in the 1970's and 1980's during their search for shale oil. The same shale formations are now being assessed for potential gas production. This concept follows recent global developments in shale gas, where technology advancement in drilling and extraction technologies have allowed for economic development of significant shale gas resources.

If the geological evaluation proves successful, the partners will consider committing to a more extensive exploration programme in the Karoo Basin.

Shale gas is clean natural gas produced from shale, a type of sedimentary rock, mainly consisting of clay and some organic matter. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in Canada and Europe and now also in South Africa. The Karoo Basin in South Africa has unproved shale gas potential and significant exploration efforts are required to assess and quantify this prospective resource.

"A discovery of large recoverable shale gas reserves in the Karoo Basin will be a game changer in the broader South African energy market context and will likely constitute a major step to further develop gas transmission and distribution infrastructure in the country", said Ebbie Haan, Managing Director of SPI.

Large gas discoveries in the Karoo Basin could also help alleviate South Africa's power and fuels shortage and assist in creating employment and wealth for the country. In addition, the increase of natural gas in South Africa's energy portfolio will significantly aid in the reduction of greenhouse gas emissions on a per unit basis compared to more conventional resources such as coal.

But we are at the beginning of a journey that requires technical risk reduction, environmental stewardship, stakeholder alignment and in case of success, significant future capital investment.

The companies involved in this joint exploration venture combine world-class competencies in shale gas operations, upstream project execution and chemicals/fuels/energy business.

Sasol Petroleum International develops and manages Sasol's upstream interests in oil and gas exploration and production in a number of countries SPI also pursues gas exploration opportunities to enable it to supply feedstock to potential Sasol Gas-to-Liquids (GTL) plants.

Statoil is an international energy company with operations in 40 countries building on more than 35 years of experience from oil and gas production on the Norwegian continental shelf. Headquartered in Norway with 30 000 employees worldwide, Statoil is Europe's second largest gas supplier. The company has a market capitalisation of around 80 bn USD and is listed on the New York and Oslo stock exchanges.

Chesapeake Energy Corporation is a Fortune 500 company with an enterprise value of more than USD30 billion, has more than 9 000 employees, is the world's most active driller of horizontal shale wells, and is the second largest natural gas producer in the USA. Chesapeake Energy Corporation has a significant acreage position in the four largest shale plays in the USA and uses proprietary shale gas technology to successfully explore and produce shale gas.

In November 2008 Statoil and Chesapeake Energy Corporation entered into a Joint Venture with in the Marcellus Shale play in the USA.

Published 19/07/2010

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