CNOOC to Build $4.38 Billion Coal-Based Natural Gas Project in Shanxi

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Researched by Industrial Info Resources (Sugar Land, Texas)--CNOOC New Energy Company Limited (Beijing), a subsidiary of CNOOC Limited (NYSE:CEO) (Beijing), recently signed an agreement at the Expo Central China 2009 conference in Hefei, Anhui province, with the government of Datong city and the Datong Coal Mine Group Company (Shanxi province) for a $4.38 billion coal-based natural gas project in Shanxi.

This is the largest investment to be made in coal-based natural gas in China, and it is also the largest investment to be made in energy and processing in Shanxi. According to the agreement, CNOOC and Datong Coal will build 4 billion-cubic meters coal-based natural gas project that will also product byproducts such as synthesis gas, gasoline, diesel, hydrogen, oxygen and other fine chemical products. The project also entails the construction of two 10 million-ton support coal mines and associated coal selection plants, as well as coal gangue power plants in three years.

The project will be built under the control of CNOOC with the participation of Datong Coal. The two support coal mines will be built under the control of Datong Coal with the participation of CNOOC. In addition, CNOOC will build a gas pipeline to transport natural gas from northern Shanxi to regions around the Bohai Sea, including Beijing, Tianjin, Hebei, Shandong and Liaoning. The pipeline is expected to complete in three to five years.

Natural gas consumption in China has been growing quickly in recent years. It is expected that the demand for natural gas in China will reach 100 billion-110 billion cubic meters in 2010, while the output of natural gas will total about 90 billion-95 billion cubic meters in the same period. Therefore, the development of coal-based natural gas could help to solve the shortage.

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