National Development and Reform Commission formally approves coal gas production capacity of 15.1 billion cubic meters

Recently, the coal-based natural gas (SNG) project invested and constructed by Qinghua Group in Xinjiang was approved by the National Development and Reform Commission. This project became the first one approved by the National Development and Reform Commission in June 2010 after tightening the approval authority for coal-based natural gas. According to statistics from Asian Chemicals Consulting, as of August 2010, there have been four coal-based natural gas projects officially approved by the National Development and Reform Commission, with a total capacity of 15.1 billion cubic meters per year.

The Qinghua Group's coal-based natural gas project is located in Yining County, Yili County, Xinjiang, and the coal raw materials mainly come from the Yili River Valley. The synthetic natural gas produced by the project will all be connected to the West-East Gas Pipeline Network. According to public information, the total investment of the project is 27.8 billion yuan, and the designed total production capacity is 5.5 billion cubic meters per year, which will be conducted in four phases. The first phase of the project has a capacity of 1.375 billion cubic meters per year, which was started in July 2009 and is scheduled to be put into production in July 2011.

Sinochem Consulting believes that due to the geographical advantage of the starting point of the West-East Gas Pipeline, coal-to-natural gas will become the focus of coal chemical development in Xinjiang. The Qinghua project was the first to pass approval, which reflected the central government’s strong support for the use of abundant coal resources in Xinjiang and its strong support for local economic development through local transformation. In addition, how to link up with the existing national natural gas pipeline network and how to determine the pricing model of the inflow network, the Qinghua Xinjiang project will also provide reference for other coal-based natural gas projects in the future.

At present, China's four approved coal-based natural gas projects are Datang Inner Mongolia Chifeng 4 billion cubic meters per year, Datang Liaoning Fuxin 4 billion cubic meters per year, and Huieng Inner Mongolia Erdos 1.6 billion cubic meters per year. China Xinjiang Yili 5.5 billion cubic meters/year project.

China Qinghua Group was established in August 2000. The company formerly known as Ningxia Qinghua Co., Ltd. is one of the 20 key coal enterprises in the Inner Mongolia Autonomous Region. Its headquarters is located in Bayanhot, where Alxa League is located, and is a privately-owned enterprise. It is a comprehensive large-scale mineral resource development enterprise integrating mining, mineral processing, coking, coal chemical industry and steel industry.