Sasol has previously said the feasibility study on the project named Mafutha, the Zulu word for oil, would examine the availability of sufficient coal reserves, power supply, possible plant locations, fuel demand growth and other logistics.
"The pre-feasibility study is expected to be completed during 2008," Sasol's chief executive Pat Davies said.
"On Project Mafutha, we continue to work closely with government to advance the construction of a CTL plant in a coal-rich inland region as another option in maintaining a measure of self-sufficiency in future energy supply."
Sasol, which produces about 150,000 bpd of motor and industrial fuels, already supplies about 35 percent of South Africa's liquid fuel needs from its coal-to-liquids refinery at Secunda, to the north of the country.
This project is to be built is in line with recommendations made by a special task team set up by the Minister of Minerals and Energy to investigate strategic options to avoid future energy constraints after national fuel shortages hit the country in December 2005.
"If it goes ahead, Project Mafutha could add around half of the fuel volumes of our Secunda plant to the country's supply," Davies said, adding that given the acceleration in energy demand expected in South Africa, capacity expansion in our domestic market presented an attractive opportunity for Sasol's growth.
Sasol last month said it had ordered a reactor to increase its synthetic fuels output at Secunda to 180 000 barrels per day by 2015.
Sasol reiterated that it was projecting capital expenditure of about 50 billion rand over the next three years, of which about half is in Southern Africa.