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Vital role for government in gas-to-liquid industry

WA could play a big part in the future of the gas-to-liquid industry but government intervention is needed to make it happen, according to Sasol Chevron project director Tony Pytte.

Addressing the American Chamber of Commerce in Perth last week, Mr Pytte said an appropriate fiscal and industry policy regime was required to establish the industry and head off competition from other countries.

He said the depreciation allowance period on capital investments should be lowered, not increased, as proposed by the Federal Government.

“It is our view that capital write-off periods of around 10 years or better are critical to establishing the industry,” Mr Pytte said.

“Our investment competitors in other countries and related industries already have capital write-off periods in this order or lower.”

The US recently introduced seven-year capital write-off periods for clean fuel investments.

“Infrastructure and site development could also help the industry, provided it is appropriately targeted,” Mr Pytte said.

Removal of the distortions in the fuel excise system is another measure that would give the GTL a chance in Australia, he said.

“We are asking for equitable treatment on the basis of the efficiency and environmental performance of our fuel and offering large-scale benefits to Australia in return,” Mr Pytte said.

The Government has set up a GTL Taskforce, which is due to report to Industry, Science and Resources Minister Senator Nick Minchin in the next few weeks.

Sasol Chevron is currently looking at the commercial feasibility of a 30,000 to 45,000 barrel-per-day plant, attracting $8 billion in capital investment during the nine year, three-phase construction period.

Sasol Chevron believes the project will make a $13 billion contribution to gross national product in the first 10 years of operation and will add an estimated $14 billion to government coffers during the life of the project.

Sasol and Chevron reached a memorandum of understanding to form a global joint venture in May 1999, while Sasol Chevron Holdings was formed in October last year.

Sasol is a South African company with proven GTL technology. Chevron is an international oil and gas company with both upstream and downstream capacity.

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