BEIJING -
The Chinese government will soon issue an industry
policy to regulate the coal-chemicals sector,
after a circular last month ordered local
authorities to tighten their grip on the approval
of new coal-to-petrochemicals projects in China.
Industry insiders familiar with the
situation said the move aimed to ward off a
potential investment spree as soaring global crude
prices press China to turn to alternatives based
on its abundant coal
resources.
"Investment in coal-chemicals
projects in China has shown signs
of overheating. Many
proposed plants will face great risk in terms
of both technical feasibility
and capital investment if we don't put a brake on
them," said an official from the National
Development and Reform Commission (NDRC), who
wished to remain anonymous. "The upcoming policy
aims to set the coal-chemicals industry on the
right development track."
The
coal-chemicals industry included coking, coal
gasification, liquefaction and the production of
calcium carbide, the NDRC said.
Most of
the under-construction coal-to-oil and
coal-to-olefin projects in China, with a combined
annual capacity of more than 100,000 tons, had not
ensured viable technology and their single
capacity did not satisfy government requirements,
the NDRC said. Pan Derun, vice president of
the China Petroleum and Chemical Industry
Association, said the government would likely
publicize the new industry policy by the end of
the year, in line with last month's circular.
"It will not be as early as October, but
hopefully within the year," said Pan, who
participated in the workshop on the new
regulation. Related NDRC departments had yet
to finalize the details of the policy, and an
exact issue date for the new rules was not known,
the NDRC official told China Daily.
The
new industry policy would not place curbs on
foreign companies' participation in China's
coal-to-petrochemicals projects, although some
industry analysts had suggested the government
encourage China's homegrown technology and
engineering, according to the NDRC official.
An increasing number of global giants in
the coal conversion field, such as Royal Dutch
Shell and South Africa-based Sasol, have shown
strong enthusiasm for China, the world's second
largest energy consumer and top coal producer.
Shell has so far clinched 15 deals to
supply coal gasification technology to China, one
of which is a 50-50 joint venture with the
country's biggest oil refiner Sinopec. It has so
far been used to produce synthetic gas for the
manufacture of fertilizers, hydrogen and methanol.
Shell and Sasol have signed a deal with
state-owned China Shenhua Group to study two
coal-to-liquids plants in northwestern China with
an investment of up to US$12 billion.
Meanwhile, both small and large domestic
firms are mushrooming in the booming
coal-to-petrochemicals market in China, prompting
industry worries of overcapacity due to a
potential investment binge.
"It has become
a really hot investment destination. Almost every
mining company said they want to build
coal-to-petrochemicals projects," said Li
Fengshan, deputy director of China Petroleum and
Chemical's international cooperation department.
"If not well planned, the increasing
number of coal-chemicals plants in China may lead
to huge wastage of natural resources," said the
petrochemical association's Pan.
Large-scale coal-chemicals projects needed
tens of millions of cubic meters of water for the
production process annually, and runaway
development of such projects would have an impact
on the environment, the July NDRC circular said.
To address the situation, the nation's top
economic policy planner said in the circular that
local authorities should not approve new
coal-to-petrochemicals projects until they
completed a well-planned industry blueprint.
A major industry platform for government
officials, company executives and analysts to
canvass their ideas, Beijing-based China Petroleum
and Chemical will work with the China Coal
Industry Association and the Shaanxi provincial
government during a two-day symposium on coal
conversion and the coal-chemical industry on
October 24.
