China’s State Council has given approval to the country’s largest coal-to-gas project in Zhundong of Xinjiang Uygur autonomous region, sources reported.
Led by Sinopec and with participation of Huaneng Group, Yankuang Group, Xinjiang Longyu Energy Co., Ltd, Lu’an Mining Group and Shenhua Group, the project is expected to reach a combined gas production capacity of 36 billion cubic metres per annum, with total investment up to approximately 200 billion yuan ($32.7 billion).
As part of the project, Sinopec’s subsidiary Sinopec Xinjiang Energy Chemical Co., Ltd. will invest 70 billion yuan to build coal-to-gas production facilities with an annual production capacity of 8 billion cubic metres, as well as two super-large coal mines each with yearly production capacity of 15 million tonnes.
Having inked preliminary sales agreements with large power groups including Huaneng, Huadian and Guodian in advance, Sinopec, with serene confidence, is planning to put these facilities into operation by June 2017.
In light of the scarcity of oil, Sinopec has targeted coal chemical as the main area of future growth. The group aims to build six coal chemical bases in Inner Mongolia, Xinjiang, Guizhou, Anhui, Henan and Ningxia by 2015, and realize a gas production capacity of 30 billion cubic metres by 2020, according to its ten-year development plan formulated last year.
China has strictly controlled the approval of coal-to-gas project since 2010, due to vast investment, high cost and slow return. Despite the preliminary approval for 15 coal-to-gas projects (52.284 billion cbm/y) by the end of July, the government remains very prudent in coal-to-gas projects.
Xinjiang Guanghui New Energy Co., Ltd put its Hami-based coal-to-gas project with a designed yearly gas capacity of 500 million cubic metres into operation in April 2012, with liquefied natural gas as the main product.
The first phase of Xinjiang Qinghua Energy Group’s coal-to-gas project in Yili of Xinjiang and Datang Group’s project in Chifeng of Inner Mongolia and Fuxin of Liaoning, with a combined gas capacity of nearly 4.5 billion cubic metres per annum, is expected to come on stream this year .