Shenhua exempt in China stoppage of coal-to-oil projects
4/9/2008 17:32
China has halted all coal liquefaction projects nationwide, except two
involving the Shenhua Group, the National Development and Reform Commission
(NDRC) said today.
Of the two exceptions, one was the under-construction
coal-to-fuel project of Shenhua Group; the other was the Ningdong indirect coal
liquefaction project jointly planned by the Shenhua Ningxia Coal Group and the
South Africa-based Sasol Ltd
The latter cannot start operation before
receiving official approval.
"The move aims to control the business risk of
the country's coal-to-oil industry, which is still in an experimental stage,"
the NDRC said.
The commission also called on local governments not to approve
any new coal-to-oil projects.
Coal provides up to 70 percent of the country's
energy needs, mostly for the power sector and steel industry. As the price of
oil continues to rise, some local governments and enterprises have started
coal-to-oil projects, mostly in coal-rich areas in the northern regions.
In
response, the NDRC said: "Coal liquefaction is a technology-, talent- and
capital-intensive project, but most domestic enterprises lack advanced
technologies, management experience and equipment."
In 2006, the NDRC issued
a circular urging for the "healthy development" of industries turning coal into
oil or oil substitutes such as methanol and alkene.
It then raised the
threshold for coal liquefaction projects to a minimum annual output capacity of
3 million tonnes for fear of excessive production.
Shenhua, China's biggest
coal company, is expected to produce the country's first barrel of liquid fuel
from coal this month using a self-developed technology known as direct coal
liquefaction.
Xinhua
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