South African energy group Sasol confirmed on Monday that it would launch a prefeasibility study into a possible new coal-to-liquids (CTL) plant in India after it and Tata & Sons beat off stiff competition from 21 rivals to secure rights to a coal block in the Orissa state.

Orissa, which is located on the east coast of India, near the Bay of Bengal, is considered a resource-rich territory and reportedly hosts a fifth of India's coal.

Earlier in the month, Indian government awarded the country’s first two CTL projects to the Sasol-Tata joint venture and Jindal Steel & Power.

The Sasol-Tata alliance, known as Strategic Energy Technology Systems, had reportedly been awarded the north Arkhapal block, following the competitive bidding process.

It is understood that the joint venture’s eventual bid scored well above those achieved by rival bidders for the same block, opening the way for a possible 80 000-bl/d facility.

Sasol CEO Pat Davies said that he was “delighted” by the fact that Sasol had been awarded “the very coal block that we applied for against 21 other companies, some of which are very serious companies”.

He lauded the role played by both Indian business luminary Ratan Tata and Tata & Sons in helping Sasol and the joint venture to present a successful bid.

“It is still a long way to go. But you can’t start a project based on coal-to-liquids technology, if you don’t have the coal tied up – so at least we have got that,” Davies enthused.

The Indian prefeasibility investigation would also bring to three the number of serious CTL studies currently under way within the JSE-listed group.

The company was advancing a full feasibility study in China and was nearing the point of being able to progress its so-called Mafutha CTL project, which was proposed for development in South Africa’s Limpopo province, from prefeasibility to full feasibility stage.

In China, Sasol was hoping to complete a feasibility study into the construction of a 80 000-bl/d plant by the first half of its 2010 financial year. The project, which was being studied for the Ningxia Hui Autonomous Region, was being progressed together with State-owned mining and energy group Shenhua.

MAFUTHA READY TO ‘COMPETE’ WITH COEGA PROJECT
South African energy cluster head Dr Benny Mokaba said that, while the Mafutha prefeasibility study was close to completion, the final capital costs was a “moving target”, owing to the volatility in the project economy.

“We are confident. So confident, that we have acquired some land appropriate for it [Mafutha] and we have acquired the reserves appropriate for it and we have also applied for a manufacturing licence,” Mokaba said, adding that a memorandum of understanding had also been concluded with the Industrial Development Corporation, which would partner Sasol on the project.

Davies also told Engineering News that it was also willing to compete for inland market share with a potential influx of transport fuels that could arise should PetroSA’s 400 000-bl/d crude-oil refinery and associated transport infrastructure be progressed as marketed.

“We are continuing Mafutha with earnest.

“We believe it has all the right drivers: it will use coal that would probably not have been used; it creates jobs; it’s in the inland region where the market is based and where the market is growing most strongly,” Davies asserted.

He said that it appeared that the Coega refinery development was underpinned by a “grand strategy” by government, but that “Sasol has never been afraid to compete”.

“We will compete against any refinery at the coast that puts product into the inland region,” Davies concluded.