Sasol Open to Adding Coal Conversion Projects in China

Sasol Ltd., the world’s largest maker of motor fuels from coal is open to adding plants to convert coal to fuels in regions of China, according to company president for the country, John Armstrong.

The Johannesburg-based company will also consider projects to convert shale gas into liquid fuels should the nation allow access to such an industry in the future.

Sasol is trying to gain a foothold in China with a $10 billion joint venture coal liquefaction facility in the Ningxia Hui autonomous region with Shenhua Ningxia Coal Industry Group Ltd., a unit of the nation’s biggest coal producer. Sasol has halted development of the plant pending state approval, the company said in February.

“We are alert to other opportunities,” Armstrong said. “But the focus remains on Ningxia and we will not do anything to detract from this,” he said.

Sasol, South Africa’s second-biggest company by market value uses its Fischer-Tropsch technology to transform gas from below the ocean floor and coal into liquid fuels such as gasoline and diesel in South Africa and Qatar.

Anderson said there are other opportunities for partnership, perhaps with different partners or a different region “It’s hard for anyone to say no to a project in Xinjiang.”

China is developing poorer provinces in the west including resource-rich Xinjiang, which contains 40 percent of the nation’s proven coal reserves, according to government data.

The country has tapped foreign companies including Royal Dutch Shell and Chevron Corp. to help explore and extract shale gas reserves, estimated to be 12 times higher than conventional gas reserves, according to the U.S. Energy Department last month.

“Right now, China places quite a bit of restriction on what you can do with gas and at the moment, gas to liquid isn’t too much on the radar screen,” Armstrong said. “Depending on what happens to shale gas, that might change.”

The Ningxia Project

Coal-to-liquids and coal-to-gas projects were removed from the Chinese government’s list of industries whose development it plans to encourage, according to a report from the National Development and Reform Commission, China’s top economic planning agency.

Sasol hasn’t set a deadline for getting government approval for the Ningxia project, Armstrong said.

“We still think we are moving in the right direction although that’s moving slower than we’d like,” he said.

Source: Bloomberg