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Oil's Dramatic Leap Is Good News for NatGas: Sasol CEO

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Published: Thursday, 31 Mar 2011 | 11:18 AM ET
By:

Assistant Editor, CNBC.com

General unrest in the Middle East has had a "dramatic impact on oil prices," the chief executive of a major South African mining and energy company said Thursday—and he makes no secret of the fact that that's good news for his firm.

High Prices Helping Sasol: CEO
Events in the Middle East, abundant discoveries of shale gas in the US, the European nuclear situation and climate change issues all need to be taken in consideration in evaluating the price of natural gas, Sasol CEO Pat Davies told CNBC.

Sasol Chief Executive Officer Pat Davies told CNBC that ongoing crises in the Middle East and North Africa are building a "$15 to $20 in risk premium" into the price of oil, which was above $106 a barrel on the New York Mercantile Exchange on Thusday.

“It is good for us,” Davies said. "We take natural gas and coal, and we convert it into oil. So oil prices are great for us, and it gives us a great opportunity."

More and more countries are turning their back on oil, Davies said, favoring natural gas as a way to protect their energy security. And the situation could shift away from oil even more.

“Libya, on its own, only accounts for about 2 percent of oil production.” he said. But if the “Middle-East becomes a little unstable ... that’s about one-third of the world’s oil production. So that would be more of a concern.”

Political unrest is not the only factor threatening countries’ energy security. A debate over the sustainability of nuclear energy has re-emerged in Europe as Japanese authorities struggle to manage the unfolding crisis at the Fukushima nuclear plant.

"(Gas) prices are a little up in Europe at the moment, because of the nuclear situation rising out of Japan, and the closing of certain stations," Davies said, adding that “gas is rather popular in Europe at the moment."

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General unrest in the Middle East has had a "dramatic impact on oil prices," the chief executive of a major South African mining and energy company said Thursday—and he makes no secret of the fact that that's good news for his firm.
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