Coal-to-liquid project may start earlier
Updated: 2007-12-17 11:26
Experts say that as world oil prices approach $100 a barrel, Sasol's projects look increasingly appealing to China, where coal is abundant and about half of oil consumed is imported from overseas.
The Chinese government has felt the pinch of soaring oil prices that climbed to more than $90 a barrel in November. Due to a price gap between the domestic and world oil markets, some major cities experienced gasoline shortages last month. The National Development and Reform Commission resorted to administrative measures to force China's two oil giants to meet the demand for gasoline.
Amid calls for China to build more strategic oil reserves to ensure energy security, Strauss believes China's coal reserves provide a significant strategic opportunity to improve both its energy security and self-sufficiency. The nation has about 1 trillion tons of explored coal reserves, ranking it third in the world.
But since they were first proposed, Sasol's projects in China have been controversial due to doubts about their energy efficiency and economic viability.
According to Strauss, the efficiency of coal to oil is around 40 percent with the remainder used to make other coal chemical products. The company is now researching how to improve efficiency.
Generally speaking, he says, at an oil price of $50 a barrel, the CTL process is commercially viable.
If oil is cheap, the CTL does not make economic sense, he says. But a growing thirst for oil and global competition for resources means CTL "is a strategic decision for a country to make".
Sasol's studies say that 15 CTL plants could replace almost 15 percent of China's fuel imports by 2020.
Its two projects are designed to produce 80,000 barrels of liquid fuel a day. Each plant is expected to cost $5 billion to $6 billion. Depending on coal quality, one CTL plant converts 13 to 19 million tons of coal annually.
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