BIZCHINA / Top Biz News

Eight coal-to-oil projects in pipeline
By Wang Ying (China Daily)
Updated: 2006-06-16 08:57

Despite the hefty investment, Zhang said CTL is still a very lucrative business, as crude oil prices are not expected to fall much in the near term.

"If crude oil prices stay above US$40 a barrel, we will see our investment returned within eight years," Zhang said.

Crude oil reached a record US$75.35 a barrel on the New York Mercantile Exchange last month, the highest price since trading began in 1983.

Beijing-based Shenhua will start production at its first coal-to-liquid project at the end of next year in the northwestern Ordos Basin.

The project will supply 1 million tons of oil products a year to North China, Zhang told China Daily in a March interview.

The company has also signed a memorandum of understanding with Shell to develop another coal liquefaction project in Ningxia.

CTL projects require large amounts of water to turn coal into oil.

Producing 10,000 tons of oil from coal will need about 100,000 tons of water, Zhang said.

Shenhua's CTL projects will use water from the Yellow River in the north, the second-biggest river in China, he added.

It will use a total of 1 per cent of the river's total water.

Coal now supplies more than 70 per cent of China's energy demands, and the country's proven coal reserves amount to about 1 trillion tons, Zhang said.


Page: 12

(For more biz stories, please visit Industry Updates)