PetroChina to Invest $135 Million in Fuel-Ethanol Project in Eastern China

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Researched by Industrial Info Resources (Sugar Land, Texas)-- PetroChina Company Limited (NYSE:PTR) (PetroChina) (Beijing) signed a framework agreement with Yancheng in eastern China's Jiangsu Province in late October to work on a fuel-ethanol project with a total investment of $135 million. Phase I of the biofuel project is designed to produce 200,000 tons per year of ethanol in Yancheng. The agreement is the first of its kind for the city, a local official said.

Plans for ethanol projects in Jiangsu have recently been approved by the National Development and Reform Commission (NDRC), and the fuel-ethanol project located in Yancheng in Jianhu County was among the first to be approved.

This is not the first time PetroChina has cooperated with a local government in biofuel projects. As early as 2001, PetroChina overtook the demonstrative 600,000 ton-per-year fuel-ethanol project in northeastern China's Jilin Province with a total investment of $39.14 million.

According to reports, the oil and energy giant has signed an agreement with eastern China's Shandong Province to develop the biofuel industry. The company plans to build a 200,000-ton-per-year fuel-ethanol plant and a 100,000-ton-per-year biodiesel plant in Shandong. The company also signed a contract with southwestern China's Guangxi Zhuang Autonomous Region to build two fuel-ethanol plants mainly for feasibility research, each of which will be able to yield 200,000 tons of ethanol with sweet potato as the raw material. PetroChina has also started planning similar projects in Yunnan and Sichuan provinces.

The company's development plan in new energy declared by PetroChina's Vice President Hu Wenrui will amount to $134.97 million by 2010 with a production capacity equaling 3 million tons of oil.

According to reports, the NDRC has approved four pilot projects of biofuel ethanol so far and has formulated an overall production capacity of more than 100 million tons per year.

According to China's 11th five-year plan, the nation will not encourage the use of corn as biofuel raw material but turn to crops such as sweet potato and sorghum to produce liquid biofuel, including ethanol and biodiesel.

Various taxation and fiscal incentives, including subsidies and tax breaks, will be given to guide and encourage the development of renewable energy while ensuring China's food security, said Chen Deming, the NDRC's Vice Minister.

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