The government today said oil production from two coal blocks in Orissa, alloted to Jindal Steel and Power (JSPL) and Strategic Energy Technology Systems (SETL), via coal-to-liquid technology is likely to begin by 2018.
"The proposed oil production is expected to commence by 2018," Coal Minister Sriprakash Jaiswal said in a reply to Lok Sabha.
Coal Ministry had allocated two coal blocks in Talcher coalfields in Orissa, that is North of Arkhapal-Srirampur block to SETL and Ramchandi Block to JSPL for coal-to-liquid project, the minister said, adding that the proposed production capacity of each project was 80,000 barrels of oil per day.
"A policy decision has been taken to promote coal liquefaction in the country from the energy security point of view.
A gazette notification has been issued on notifying coal liquefaction as one of the specified end uses for the purpose of allotment of captive coal/lignite blocks to the entrepreneurs," Jaiswal said.
The minister also said that developers of both the coal blocks have tied up with foreign firms to develop these projects, adding that Coal India had also evinced interest in the coal liquefaction sector.
Converting coal to a liquid fuel (CTL)- a process referred to as coal liquefaction- allows coal to be utilised as an alternative to oil and diesel.
Earlier, an inter-ministerial group that scrutinised applications from various firms, recommended awarding the coal-to-liquid (CTL) pilot project to the Tata-Sasol JV -- Strategic Energy Technology Systems Ltd -- and JSPL.
Coal-abundant India has been pushing for the CTL project to cut its dependence on imported oil.