China's biggest coal producer, Shenhua Group, plans to convert coal into 30 million tons of oil by the year 2020 in four northern provinces.

Three of eight projects planned will be completed by 2010, Zhang Yuzhuo, in charge of Shenhua's coal liquefaction business, told an energy forum hosted by the China Energy Research Society in Beijing yesterday.

The first three plants are expected to have a total capacity of 4 million tons a year, said Zhang.

"We aim to produce 30 million tons a year by 2020," the company executive said.
The eight plants will be built in Shaanxi, and the autonomous regions of Inner Mongolia,  Xinjiang Uygur and Ningxia Hui.

The State-owned energy conglomerate plans to partner with foreign companies, such as Royal Dutch Shell and Sasol, based in South Africa, over technology transfers.

"We have almost finalized talks with South Africa and will possibly sign a deal with them sometime next week," Zhang said, declining to give details of the accord.

China's abundant coal reserves, surging oil demand and soaring world oil prices suggest good prospects for the coal-to-liquids (CTL) technology.

This can turn coal into oil and chemical products such as diesel, gasoline and naphtha, a raw material for producing other petrochemicals, Zhang said.

China is expected to use 115 million tons of gasoline and diesel by 2010, a figure expected to reach 216 million tons by 2020, Zhang said.

Building CTL facilities with a capacity of 10,000 tons a year will cost about 100 million yuan (US$12.5 million), at least seven times the spending to build a oil refinery or other petrochemical complexes, Zhang said.

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