China is mulling a $6-billion coal project with South African company Sasol that could give the energy-hungry mainland an additional six million tons of oil annually, state press reported on Tuesday.
In September a Sino-South Africa team will begin studying the feasibility of building two coal liquefaction production bases in northern Shaanxi province and Ningxia autonomous region, Xinhua news agency said.
”This marks China’s strengthened efforts in finding substitute energy and its attempts to counteract price fluctuations in the global crude oil market,” Zheng Xinli, deputy director of the policy research office of the communist party’s central committee, was quoted as saying.
Coal liquefaction is the conversion of coal into synthetic fuels. Liquid and solid products from coal can be used for fueling vehicles, power generators as well as yielding materials for chemicals.
China’s increasing dependency on Middle East oil and rising crude prices have spurred a new sense of urgency in the country to guarantee its energy supplies as the economy continues to expand at record pace.
A net importer of petroleum products since 1993 and of crude oil since 1996, China is reliant on overseas producers for one third of its demand.
To reduce its reliance on foreign crude oil, China started coal liquefaction efforts in 2001 and has managed to keep down what are generally considered expensive production costs to $20 per barrel, Zheng said.
China is interested in coal liquefaction on a large scale as the country’s coal reserves of some one trillion tonnes account for 70% of its total energy reserves, Xinhua said. – Sapa-AFP