UPDATE: Sasol Scraps One Proposed China Coal-to-oil Project
Thursday August 28th, 2008 / 17h42
easybourse.com
(Adds Sasol's decision not to proceed with Shaanxi study, CEO quote, details.)
BEIJING (Dow Jones)-South Africa's Sasol Ltd. (SSL) said Thursday it was scrapping one of its two proposed coal-to-liquids projects in China, after Beijing indicated it was scaling back a drive to produce synthetic fuels from its largest energy source.
Sasol said it was no longer proceeding with plans for a CTL project in the northern province of Shaanxi and would focus fully on a feasibility study of a plant in neighboring Ningxia Hui autonomous region with a capacity of 80,000 barrels a day.
Pat Davies, chief executive of Sasol, said: "I believe that it is the right decision to focus all our attention and resources on ensuring the planning and construction of a world-scale 80,000 barrel a day, fully integrated CTL plant in the Ningxia Hui autonomous region."
The proposed site at the Ningdong Chemical and Energy Base has excellent infrastructure and a significant amount of preparation work has already been completed, Sasol said, adding the project has the full support of Ningxia Governor Wang Zhengwei.
Sasol is partnering Shenhua Ningxia Coal Group, a unit of China's largest coal miner Shenhua Group, in the Ningxia project study.
"This strategy aligns with a recent notice issued by the National Development and Reform Commission," Sasol said in a statement.
The NDRC is China's economic planning agency. Although there has been no official confirmation of a new national policy on CTL in China, a notice on the Web site of Ningxia's planning body earlier Thursday said China would only allow two projects to proceed and all others should be put on ice.
Regarding its other feasibility study for a CTL plant in Shaanxi, which would no longer proceed at this stage, Sasol said Shenhua and itself would maintain the good relationships with the province which have been established over many years.
The two projects are Sasol's proposed facility in Ningxia and Shenhua's wholly owned plant in Erdos city in Inner Mongolia, which has a planned annual output of 1.08 million metric tons in its first phase before ramping up to 3 million tons.
Other Foreign Investors Seeking Access
Shenhua's plant is due to be commissioned next month. If confirmed, China's new policy on CTL projects will deal a blow to other foreign investors seeking access to the country's growing market for transport fuels by liquefying coal.
In 2006, oil major Royal Dutch Shell PLC (RDSA) signed an agreement with Shenhua Ningxia Coal Industry Co., a unit of the Shenhua Group, to conduct a joint study for a CTL project in northwestern China.
A Shell spokeswoman said Thursday the company and its Chinese partner remain committed to the project, based on the initial technical study.
"Shell and Shenhua Ningxia Coal Industry have agreed to carry (out) further work," she said. Other foreign companies looking to create synthetic fuels in China include Total SA (TOT), which says on its Web site it is currently in talks with Chinese companies about possible CTL projects.
Creating synthetic fuels such as gasoline and diesel from coal has been widely studied in China, given the country's dependency on crude oil imports. Potential oil output from the scores of plants with CTL technology that are currently under construction or on the drawing board in China could meet 10% of the country's total oil consumption, analysts say.
However, critics say the technology uses too much water, and greenhouse gas emissions are higher than those at conventional refineries. Furthermore, China has suffered a shortage of coal in recent months, resulting in brownouts in cities as thermal power generators are forced to take capacity offline. Widespread use of CTL technology could reduce the supply of thermal coal available to the market if coal production doesn't keep pace with demand.
-By David Winning, Dow Jones Newswires; 8610-65885848; david.winning@dowjones.com
Thursday August 28th, 2008 / 17h42 Source : Dowjones Business News |
