Synthetic Fuels

FESTEL CAPITAL


	Synthetic Fuels with a Special Focus on Russia and China

Background

Due to the strong and increasing demand in crude oil, processed petrol and diesel, alternative fuels are sought to overcome a future shortage.

Different possibilities and technologies are being discussed. By applying the Fischer-Tropsch synthesis liquid fuels can be processed out of natural gas (Gas-to-Liquid (GTL)), coal (Coal-to-Liquid (CTL)) and even biomass. Natural gas can also be used directly as a fuel when compressed to Liquified-Natural-Gas (LNG).

In the second half of 2005, FESTEL CAPITAL conducted a market study to obtain an overview of the specific advantages and applied technologies as well as current activities, especially in Russia and China, with respect to GTL, CTL and LNG.




	Summary of the results of the market study

Core Messages

With the low prices for remote and flared gas, first full production GTL plants are being constructed, primarily in the Middle East.
With the growing scarcity but still increasing demand of natural gas in Western countries, LNG will become more important in the future.
Russia and China are two important countries with respect to synthetic fuels; Russia with abundant resources and China with a strong demand (second largest energy consumer after the US).
Russia is actively researching in GTL and CTL technology and a number of processes which offer considerable cost savings have been developed.
Due to the abundant gas resources, LNG is of huge importance to Russia's economy.
The most promising synthetic fuel process in China seems to be CTL technology due to the abundant resources (recoverable coal reserves in 2003 were 126.2 billion tons) in China.
It is predicted that China could be making as much as 1.2 million barrels/day of liquid fuel from coal within the next 10 years, being equivalent to more than a sixth of the current demand.

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