| Summary: | M.Com. === The discovery of natural gas and condensate during the past 10 years off the South African south coast coincided with increased calls for sanctions and isolation of South Africa by the international community. The question was raised if the natural gas could not be used to diminish our dependancy on imported oil. After several studies to determine the feasibility of converting natural gas to fuel it was decided to proceed with the conversion project referred to as the Mossgas project. The purpose would be to produce offshore natural gas with the aid of fixed offshore platforms, linked to an onshore facility via pipelines, where it would be transformed into fuel using a process similar to the Sasol Synthol process. The purpose of the thesis is to determine the influence of factors assumed to have the greatest affect on the project, i.e. tax, loans, cost overruns and the production of by-products. To quantify these subjective criteria of the influence of the above factors, financial spreadsheets were designed utilizing the Lotus 123 software programme to evaluate the impact of the variables. A series approach to sensitivity analysis was followed, calculating most likely, highest and lowest outcomes for the different variables. A base case utilizing modified Mossgas cost figures was designed and subsequent spreadsheets to evaluate specific scenarios were developed. A base case was developed evaluating the land and offshore facilities as two separate projects, linked by a transfer price for gas. The price is determined to benefit both the land and offshore projects and designed to lead to equal profitability. Equity capital is assumed to be the only source of financing for the base case. Internal rate of return (IRR) was used as a decision-making criterion throughout the analysis...
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