South AfricaÔÇÖs Sasol is planning to spend $10 billion (R77 billion) on a coal-to-liquids project in the Indian state of Orissa, according to a report by Bloomberg.
Johannesburg-based Sasol plans to produce 80,000 barrels a day of motor fuel by 2018 from a coal block in the eastern Indian state, in partnership with IndiaÔÇÖs Tata Group. Both own equal stakes in the venture.
Rising incomes in India are driving a hike in vehicle sales, which in turn is boosting fuel demand in the worldÔÇÖs second fastest-growing major economy. The countryÔÇÖs energy use could more than double by 2030 to the equivalent of 833 million metric tons of oil from 2007.
In the year ending March 2010, India's production of petrol climbed 32 per cent to the equivalent of about 422,800 barrels a day and diesel output rose 12 per cent to about 1.4 million barrels a day.
The move by Sasol follows similar investments in Indonesia and China. The company is currently considering increasing the capacity of a similar plant in China with Shenhua Group Corporation by 13 per cent to 90,000 barrels a day, it said in March. The cost of the plant with Shenhua is less than $10 billion, however.
Sasol is also partnering with Qatar and Chevron to build the first large scale commercial gas-to-liquids plant in Qatar.
Converting coal to a liquid fuelÔÇöreferred to as coal liquefactionÔÇöallows coal to be utilised as an alternative to oil.
Coal-to-liquids (CTL) technology was pioneered by Sasol in 1955, when it built the first big plant of its kind at Sasolburg in South Africa. Its Secunda plant, with 160,000 barrels of day capacity, is the worldÔÇÖs largest facility of its kind.
As well as being used in cars and other vehicles, SasolÔÇÖs CTL fuels have approval to be utilised in commercial jets. Currently around 30 per cent of the countryÔÇÖs gasoline and diesel needs are produced from indigenous coal.
Sasol, which produces more than 40 per cent of South AfricaÔÇÖs motor fuel, is planning to build new coal-to-fuel plants in the US, China and India.
The company has operations in about 30 countries and employs almost 34 000 people. In 2009 it had revenues of $4.4 billion (approx. R33.5 billion) and net income of $1.77 billion (approx. R13.5 billion).
India's Jindal Steel & Power said in March last year that it too had been allotted a CTL block in Orissa. The project would produce 80,000 barrels of fuel a day from coal and was estimated to cost approximately R68.8 billion, including mining and a power plant.
