A project for the conversion of coal to gas in China has been revived and is set to launch this year as the world’s top energy importer grapples with the fallout of the war in the Middle East.
Work on the Fuxin project began in 2011, with a price tag of $3.7 billion, but three years later, it was suspended because the project had become too problematic, Bloomberg reported today. The problems included environmental concerns, cost, and logistical and technical challenges.
Its revival this year suggests that the market environment has changed sufficiently to improve the economics of the project, as the war between the U.S. and Israel, and Iran, disrupts the global gas supply balance and prompts a search for alternative supply.
China currently has more coal than it can use as is, Bloomberg noted in its report, while its supply of natural gas has been compromised by infrastructure damage in the Gulf. There are as many as 13 coal-to-gas projects either already under construction or in the planning stages across China. Construction time could take up to five years, Bloomberg reported, but if all these projects get built, they could boost China’s synthetic gas production capacity seven times, to reach over 52 billion cu m. This would be equal to 12% of the country’s total gas supply, consultancy OilChem says.
China continues to nearly single-handedly prop up global coal consumption growth and new coal-fired power generation, despite also being the world’s leading investor in renewables and battery storage.
The country is set to commission as many as 85 coal-fired power generating units this year, out of a total global of 104 coal projects slated for start-up in 2026, according to data by non-profit Global Energy Monitor released earlier this year. In addition to power generation, China is using coal to produce gas, liquids, and chemicals.
By Charles Kennedy for Oilprice.com
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