Shenhua to build oil projects
By Wang Ying (China Daily)
Updated: 2006-06-16 08:57 Despite the hefty investment, Zhang said CTL is still a very lucrative
business, as crude oil prices are not expected to fall much in the near
term.
"If crude oil prices stay above US$40 a barrel, we will see our
investment returned within eight years," Zhang said.
Crude oil reached a
record US$75.35 a barrel on the New York Mercantile Exchange last month, the
highest price since trading began in 1983.
Beijing-based Shenhua will
start production at its first coal-to-liquid project at the end of next year in
the northwestern Ordos Basin.
The project will supply 1 million tons of
oil products a year to North China, Zhang told China Daily in a March
interview.
The company has also signed a memorandum of understanding with
Shell to develop another coal liquefaction project in Ningxia.
CTL
projects require large amounts of water to turn coal into oil.
Producing
10,000 tons of oil from coal will need about 100,000 tons of water, Zhang
said.
Shenhua's CTL projects will use water from the Yellow River in the
north, the second-biggest river in China, he added.
It will use a total
of 1 per cent of the river's total water.
Coal now supplies more than 70
per cent of China's energy demands, and the country's proven coal reserves
amount to about 1 trillion tons, Zhang said.
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