Sasol and China's Shenhua Ningxia Coal Group are to conduct a feasibility study on an 80 000 barrels a day Ningxia Hui Coal to Liquids project in the Ningxia Hui Autonomous Region.

The joint Shenhua and Sasol project in the Ningxia Hui Autonomous Region is one of only two CTL projects which will continue with further study and development in China, Sasol said in a statement on Thursday.

"This strategy aligns with a recent notice issued by the National Development and Reform Commission of the Peoples Republic of China," it said.

The proposed site in the Ningdong chemical and energy base had excellent infrastructure.

A significant amount of work had been completed in preparing the physical site, providing the platform for potential future expansion.

The significant advantages of this approach were demonstrated at Secunda in South Africa during the phased construction of the Sasol Two and Sasol Three projects.

Governor Wang Zhengwei of the Ningxia Hui Autonomous Region recently visited Sasol in South Africa and had expressed his full support for the project.

Although the greater focus on the Ningxia feasibility study would have the result that Sasol's Shaanxi feasibility study would not proceed at this stage, Sasol and Shenhua would maintain the good relationships with the Shaanxi Province which had been established over many years.

"I believe that it is the right decision to focus all our attention and resources on ensuring the planning and construction of a world scale 80 000 barrel per day, fully integrated CTL plant in the Ningxia Hui Autonomous Region," Sasol chief executive Pat Davies said.

"Sasol is delighted to be a full partner in the integrated CTL project, to bring its world-leading proprietary technology and proven commercial CTL experience to China to produce high quality environmentally friendly fuels and to add significant value to both the Chinese economy and Sasol," he said.

Sapa