China projects could cost $7bn
Justin Brown
Mon, 06 Mar 2006
business.iafrica.com
The two coal-to-liquids projects in China that were currently being studied by petrochemicals group Sasol could cost between $5-billion to $7-billion in total to build, Sasol chief executive Pat Davies said on Monday.
It had previously been mooted that the two CTL plants could be built at a cost of almost R37-billion or $6-billion.
Sasol completed the pre-feasibility study into CTL projects in China in November 2005 and was discussing the framework for developing the feasibility study at present, he added.
"We are quite upbeat about the China CTL projects," Davies said.
The group conducted the pre-feasibility study regarding two CTL plants in northern China's Shaanxi province and a similar project in the Ningxia autonomous region.
The Chinese companies interested in the projects are Shenhua Group and Ningxia Coal industrial Group.
The study was conducted into the establishment of two CTL plants with capacity to produce 70 000 to 80 000 barrels of fuel per day each.
The Chinese remained keen about pursuing the CTL plants, Davies said.
A typical CTL plant would consume between 15 million to 19 million tons of coal per annum, he added.
The costs
At a coal price of $10 a ton, feed stock costs would be about $5 a barrel and other direct operating costs would be about $15 a barrel, Davies said.
These costs per barrel compared to the prevailing spot Brent crude price of $63.60 a barrel at 2.40pm.
Chinese government fiscal support was essential, Davies said.
"If you think about it, China actually has all the oil that it needs," he said.
China had all its oil needs stored in the form of coal, he added. Ten percent of China's estimated coal reserves, using rough figures, would equal the world's proven oil reserves, Davies said.
The US and China have the first and third largest recoverable coal reserves, according to information on Sasol's website.
Talking to the US
In the US, Sasol was conducting feasibility studies into CTL projects in the US and was in talks with two US companies, Davies said. He would not disclose which two US companies Sasol was in talks with.
Sasol already has joint venture with US company ChevronTexaco in the form of the Sasol Chevron joint venture, which is a 50:50 partnership that pursues commercial applications of Sasol's gas-to-liquid technology for the selected reserves of natural gas.
The Sasol Chevron joint venture is currently in the process of developing GTL plants in Nigeria and Qatar.
Sasol is the world's largest producer of synthetic fuels from coal and 28 percent of South Africa's fuel is supplied from Sasol's synthetic fuel facilities.
The group welcomed the US Energy Policy Act, which came into effect in 2005, as well as the comments by US President George Bush about seeking to reduce the US' reliance on oil, Davies said.
Sasol was also looking to pursue CTL opportunities in India, which had a substantial amount of coal, he added.
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