MUMBAI | NEW DELHI: Sasol, the largest producer of motor fuel made from coal, plans to spend $10 billion in India in partnership with the Tata Group on a block awarded last year, following similar investments in Indonesia and China.
The South African company plans to produce 80,000 barrels a day of motor fuel by 2018 from a coal block in Orissa, Mark Schnell, president of the company’s Indian unit, said in an interview in Mumbai. Sasol and Tata Group own equal stakes in the venture, he said. “It’s going to be a mega project of the magnitude of $10 billion by the joint venture,” Mr Schnell said. “At this stage, the focus is on understanding the resource and making sure of the economics of building a plant here.”

Rising incomes in India are driving vehicle sales, boosting fuel demand in India. The country’s energy use may more than double by 2030 to the equivalent of 833 million metric tonnes of oil from 2007, according to the Paris-based International Energy Agency. “That is a tremendous amount of money and a project like that will become viable at very high crude prices,” said Victor Shum, a Singapore-based senior principal at US energy consultants Purvin & Gertz. “If the alternative of producing fuels from crude oil is cheaper, then a refinery would make more sense.” Sasol and the Tata Group were awarded the coal-to-liquids project in Orissa, Tata said in March last year. “We feel that this is a right step toward securing energy security for the country,” Tatas said.

Jindal Steel & Power said in March last year it was allotted a coal-to-liquids block in Orissa. The project will produce 80,000 barrels of fuel a day from coal and is estimated to cost Rs 42,000 crore, including mining and a power plant. India’s production of gasoline rose 32% to the equivalent of about 422,800 barrels a day and diesel output rose 12% to about 1.4 million barrels a day in the year ended March.
Sasol is considering increasing the capacity of a similar plant in China with Shenhua Group by 13% to 90,000 barrels a day, chief executive officer Pat Davies said. The cost of the plant with Shenhua is less than $10 billion, he said.

The South African company signed a memorandum of understanding with Indonesia for the possible development of an 80,000 barrel-a-day coal-to-fuel plant in the Asian country, Sasol said. In January 2009, Bukin Daulay, head of coal and mineral research at Indonesia’s energy ministry, said Sasol could spend $10 billion on the plant. Sasol, which produces over 40% of South Africa’s motor fuel, uses technology first employed by Nazi scientists and refined by apartheid-era engineers. The company plans to build new coal-to-fuel plants in the US, China and India.

Source : Economic Times

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