Sasol, Shenhua agree joint coal-to-oil project

South Africa’s Sasol, the world’s largest maker of oil from coal, has agreed with China’s Shenhua Group to jointly produce motor fuel from coal by 2016, Xinhua news agency reported on Friday.

Feasibility studies for two coal-to-liquid projects, in Shaanxi province and in the north-western region of Ningxia, were expected to be completed by the end of 2009, Xinhua cited Sasol CEO Pat Davies as telling a news conference.

Each of the two projects will have a production capacity of 80 000 barrels per day, or 3,4-million tonnes annually of diesel, naphtha, liquefied petroleum gas and jet fuel, the report said.

China, the world’s top coal producer and consumer, is encouraging such projects to reduce its dependence on imported oil.

Shenhua Group, the world’s top coal producer and parent of Shenhua Energy, expects to start up a major plant using its own coal-liquefaction technology in Inner Mongolia this year.

The plant will be the biggest outside of South Africa and is expected to convert 3,5-million tonnes of coal per year into one million tonnes of oil products, such as diesel for cars.

Coal-to-liquid technology is seen as a chance to reduce dependency on oil, but the process also releases carbon gases into the atmosphere and consumes huge amounts of water, raising environmental concerns.—Reuters

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