Plan includes two coal-liquefaction plants, which should help reduce China's crude oil imports by 15 per cent.

Cape Town (AsiaNews/SCMP) – China and South Africa have agreed during Chinese Prime Minister Wen Jiabao's visit to the African country to work together in order to turn coal into oil. The technical process involved in the deal is the brainchild of South Africa's Sasol Company, a leading synthetic fuel company, and was explained to Mr Wen.

Several companies are party to the agreement, Sasol and China's Shenhua Corp among them. It involves the second phase of a study to build one 80,000 barrel-a-day plant in China's Shaanxi Province and another in Ningxia Hui Autonomous region. The deals involving the two plants were signed on Wednesday and Thursday respectively.

The two projects can reduce Chinese oil imports by 15 per cent, said Sasol's chief executive officer Pat Davies. "You have large coal reserves and are importing large quantities of oil," Davies told China's Premier Wen Jiabao, and "[o]ur technology can convert that coal to oil." China is the world's biggest coal producer and consumer. Coal covers 70 per cent it its domestic energy needs and production is expected to reach 2.45 billion tonnes by 2010.

China is also the second largest oil importer in the world after the US with 127 million tonnes last year, which represented 40 per cent of the country's oil needs.

Finding other energy sources whilst reducing foreign dependency are thus at the top of China's priority list. For many experts Wen's trip to Africa (which provides a third of China's oil) was in fact planned with energy in mind.

During his stay in South Africa Wen also attended the China-South Africa Business Cooperation Forum where he pledged that China would remain a reliable strategic partner.

"We respect the principle of equality, mutual benefit," Wen said. The purpose of his visit was to establish a strategic partnership with Africa. In this perspective China plans to lower tariffs on African goods, provide low-interest loans, invest in local infrastructure and help making South Africa more competitive.

Wen said his government would also restrict textile exports to South Africa whose textile industry has been hard-hit by cheap Chinese imports and has had to shed about 25 000 jobs in the past two years.

South Africa and China reached agreements in other sectors as well like the peaceful use of nuclear energy.

Yesterday Wen left South Africa for Tanzania where he was received by President Jakaya Kikwete. (PB)

• china
• south
• africa
• tanzania
• wen
• jiabao
• pat
• davies
• coal-to-oil
• conversion
• sasol
• shenhua
• corp