Coal-to-liquid venture delivers first shipment

Project, the biggest of its kind in the world, seen as boost for China's energy security

With annual output capacity of more than 4 million metric tons of oil, the largest coal-to-liquid project in the world delivered its first shipment of products on Dec 28 in Yinchuan, Ningxia Hui autonomous region.

The project is the result of 39 months' construction and investment of 44 billion yuan (6.2 billion euros; 5.2 billion). Total investment is estimated at 55 billion yuan, according to the developer, Shenhua Ningxia Coal Industry Group, a subsidiary of energy giant Shenhua Group Corp.

Although the output is small compared with China's nationwide oil demand - expected to be 610 million tons a year by 2020 - industry insiders say the project is a milestone in the nation's energy security efforts and in the process of economic restructuring in Ningxia.

"The completion of the project is a substantive achievement for China in optimizing its strategic energy reserves," says Shenhua Chairman Zhang Yuzhuo.

"It also means that China's abilities in equipment manufacturing and integration have reached a higher level."

China's fuel resources have featured abundant coal but insufficient supplies of oil and gas, with more than 60 percent of its crude oil needs dependent on imports in 2015.

Zuo Qianming, chief coal analyst at Cinda Securities Co, says that coal-to-liquids technology had greater significance for China's national energy security than for generating profits.

"If the international oil price shoots up, China will have a backup for its oil demand," Zuo says.

The liquification project employs a process that involves gasification of the coal into a mixture of carbon monoxide and hydrogen, and then distills the syngas mixture into liquid hydrocarbons.

It will consume about 20 million tons of coal annually and produce 2.73 million tons of diesel fuel, nearly 1 million tons of naphtha and 340,000 tons of liquefied petroleum gas.

"Our technologies are leading the world in many ways, enabling us to build large-scale projects," says Yao Min, deputy general manager of Shenhua Ningxia. "The domestically developed technologies and equipment will help to cut costs and increase profit."

Guo Shaoyu contributed to this story.

Contact the writers at zhangzhao@chinadaily.com.cn and yangziman@chinadaily.com.cn

Workers help install a crane tower for the coal-to-liquid project at Shenhua Ningxia Coal Industry Group in the Ningxia Hui autonomous region. Xue Zhou / For China Daily

(China Daily Africa Weekly 12/30/2016 page25)