Economics for project final investment decisions for CTL will...

Economics for project final investment decisions for CTL will not be based on current spot prices. A long term future oil price will be used. What will it be? I don't know, but I think most oil companies now use 50 - 70 $US per barrel as being indicative. This is up from 20 - 40 $US only a few years ago.

Secondly, CTL capital costs are high and have some degree of uncertainty. That's because not too many plants have been constructed. Also, capital costs are continuing to go up in some regions. For example Woodside was struggling with costs in its current construction projects.

Thirdly, there is technical risk, though of course the project proponents normally will say its all proven. But even though that's easy to say when you dig into this you'll find its not so easy to be convinced. Even for projects where the component parts are proven the integration is still not trivial. The catalytic process is very sensitive to operating conditions which is what's causing Sasol lots of problems in Qatar. So,this is another factor which will slow down the progress of these projects.

Fourthly CO2 taxes/regulation are additional uncertainties.

So if you use optimistic numbers for all these you will have a fantastic project NPV. If you use more realistic numbers you may find its not so nice. Also be aware that the cost estimates will be revised once details of the designs etc for the specific projects are better known. In many bigger companies many projects are being pursued and only some make it. That will be the same with these small companies based on one or two big projects. I think maybe only one or two CTL projects will go to construction phase in the next five years in Australia. That might even be an optimistic number!