Sasol Teams With China Coal Firm Shenhua

Sasol Teams With China Coal Firm Shenhua

South African oil and gas company Sasol Ltd. said Thursday it signed a cooperation agreement with a consortium led by China’s Shenhua Corp. for second-stage studies on the viability of an 80,000 barrels per day potential coal-to-liquids project west of Beijing.

A similar agreement for another project in the Ningxia Hui Autonomous region, about 1,000 kilometres west of Beijing, was signed with Shenhua Ningxia Coal Ltd. Wednesday.

Sasol said the talks come as strong Chinese economic growth has caused China to increase its oil imports exponentially. As a result, the drive towards coal for energy security has been endorsed at the government level.

The proposed Chinese projects comprise two plants, each with a nominal capacity of delivering 80,000 barrels a day of liquid fuels. Combined, their capacities are roughly equivalent to that of Sasol’s existing Secunda facility in South Africa.

Initial studies confirmed that key drivers are in place for establishing a viable CTL business in China using Sasol’s low-temperature Fischer-Tropsch technology, the company said. Each plant is expected to cost more than $5 billion. Should these CTL projects go ahead, they could be brought into operation as early as 2012.

Sasol said the second-stage feasibility studies will determine capital cost, feedstock cost, water supply and market conditions and will also determine most major commercial and funding issues. Sasol intends to be a significant equity investor in these projects, rather than a technology provider only.

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