Bumi & Sasol on coal-to-liquid

This is the second announcement in less than six months of ambitious development of coal-to-liquid (CTL) technology in Indonesia. Pertamina was the first with Accelon as the partner in a planned US$6 billion CTL project to be located in East Kalimantan.

Today, PT Bumi Resources Tbk, which just offloaded two major coal producers PT Kaltim Prima Coal and PT Arutmin Indonesia at US$3.2 billion, formally announced its plan to build a 80,000 barrel per day CTL plant in South Sumatra. Bumi admitted it's in discussion with South Africa's Sasol as technology partner.

SASOL, the world's largest producer of CTL-based synthetic diesel, is building a 34,000 bpd CTL plant in Qatar and conducting feasibility study to build 2 x 80,000 bpd CTL plant in China. These China projects would cost US$6 billion. In September, SASOL visited Montana, USA to study the possibility of building a US$5 billion CTL plant in the country.

Sasol has produced almost 1,5 billion barrels of synthetic fuel from about 800 million tonnes of coal since the first sample of synthetic oil from coal was produced fifty years ago at its Sasolburg plant near Johannesburg in South Africa on 23 August 1955.

Regarded as a world technology leader in the production of coal-to-liquids (CTL), Sasol operates the world's only commercial scale synthetic plant at Secunda, where it produces 150 000 barrels of liquid fuel per day. Sasol currently supplies about 28% of South Africa’s fuel needs from coal, saving the country more than R29 billion (US5,1 billion) a year in foreign exchange.

While Bumi's plan sounds feasible, the question remains, whether they're brave enough to take the risk. One energy executive said if the oil price keeps above US$35 per barrel, such CTL technology would be feasible. But look at China.

China also signed an agreement with Sasol to build two coal-to-liquid fuel plants in China. These plants, costing $3 billion each, would jointly produce 60 million tons of liquid fuel (440 million barrels) a year. Since China imported 100 million tons of oil in 2004, these plants would give China substantial control over its domestic energy situation, though its demand is growing fast. That would put pressures on oil price.

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