China Petroleum & Chemical Corporation, or Sinopec Ltd, is a Beijing-based oil and gas company which is listed in Hong Kong, Shanghai and New York (NYSE: SNP). It is one of the world’s biggest companies by revenue. Sinopec Ltd’s parent, Sinopec Group is one of China’s biggest petroleum groups.
Sinopec coal project gets state backing
Sinopec Engineering, the plant construction arm of energy giant China Petrochemical, says orders for coal-to-chemical projects - its fastest-growing sales driver - are backed by the government despite carbon emissions and water scarcity concerns.
"Our 101 billion yuan [HK$127.9 billion] of outstanding orders are backed by real contracts, and the projects have received various government approvals," said president Yan Shaochun.
The company's net profit for the first half rose 10.8 per cent to 2.21 billion yuan.
Since most of the mainland's coal resources are in the arid northern and northwestern regions, Yan said, the company was researching methods to cut pollution and water usage.
He said present technology for converting methanol to chemicals was 9.5 per cent more efficient than the previous one. Methanol is the intermediate product in the conversion of coal into chemicals.
Beijing is keen to use its ample coal resources to replace crude oil as a source of fuel and chemical feedstock. Mainland firms have successfully built projects to turn coal into liquid fuel and natural gas, although mass commercialisation is only beginning.
The 101 billion yuan order backlog includes 29 billion yuan in coal chemical projects, 41 billion yuan crude oil-based petrochemical projects and 22.4 billion yuan oil refinery projects. The backlog increased by 33 per cent from the end of last year.
First-half turnover grew 16.3 per cent from a year earlier to 19.6 billion yuan. Sales from the coal-to-chemicals segment jumped 65 per cent to 3.7 billion yuan.
Yan said he expected the company to obtain the lion's share of a coal-to-natural gas conversion project, costing more than 200 billion yuan, led by its parent, China Petrochemical.
A Citi research report said the project was being reviewed by the National Energy Administration, and orders were expected in next year's first quarter.