Wednesday, March 29, 2006

Shenhua's coal-to-liquids plan

Financial Times reports that Shenhua Energy, China's biggest coal company, hopes Beijing will back its plans to build coal-to-liquids plants by making energy from large scale plants part of the country's strategic oil reserves.

Coal-to-liquids refers to the process of converting coal into liquid fuels, such as diesel. Methods for coal liquefaction are derived from the Fischer Tropsch process, and most expertly exploited in recent times by South Africa's Sasol. The firm's current capacity of CTL is about 150,000 barrels per day.

Shenhua hopes the government will set a floor price for oil, thereby protecting it from losses in the event that oil prices were to drop below levels that make CTL profitable.