Guizhou to Invest $16 Billion in China's Largest Coal-to-Oil Project

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Researched by Industrial Info Resources China (Beijing, China)--Southwest China's Guizhou province is planning to invest about $16 billion in the construction of a 6 million-metric-ton-per-year, indirect coal liquefaction project in Bijie city, according to a disclosure from the Guizhou Provincial Development and Reform Commission (GPDRC) at an investment and financing roadshow, recently held in Guiyang, the capital city of Guizhou.

As reported, the project will involve the production of 6 million metric tons per year of oil and related chemical products in two phases. Phase I, which will target 2 million metric tons per year, is to be built in Dafang County with a total investment of about $5.5 billion. Phase II, which will target 4 million metric tons per year, is to be built in Nayong County with a total investment of about $10.5 billion. Upon completion, it will be the largest coal-to-oil project in China.

Guizhou is rich in coal resources, ranking fifth in coal reserves among Chinese provinces. Guizhou's reserves are equivalent to the total amount from the 12 other provinces in southern China.

"Turning 'coalfield' into 'oilfield' has an important meaning in securing the country's energy safety, as well as in improving the comprehensive utilization of coal resources," said Gao Hong, the vice director of the GPDRC, at the roadshow.

So far, the project owner, Guizhou Yufu Energy Development Company Limited (GYEDC) (Guiyang, Guizhou) has spent more than $120 million on site surveys, land acquisition, feasibility studies and related tests for the project. More than 30 financial institutions have shown interest in the project.

Early in May 2012, the GYEDC signed a cooperation agreement with the government of Bijie City for the development of the project. In June 2012, the GPDRC gave consent to the GYEDC to conduct pre-stage preparations for the project. However, the project is still subject to approval from the National Development and Reform Commission (NDRC). The project increasingly faces opposition due to environment issues, in addition to its financial burden.

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