Sinopec seeks to commercialise geothermal energy

China Petrochemical Corp, the nation's second-largest oil and gas producer, is seeking to commercialise geothermal energy after spending about 1 billion yuan (HK$1.26 billion) in the past few years to develop more than 10 pilot projects on the mainland.

Zhou Zongying, a researcher at Sinopec Star Petroleum - China Petrochemical's geothermal energy development arm - said the renewable energy had good potential to partially replace coal-fired heat and electricity generation in big cities.

China Petrochemical is the parent firm of China Petroleum & Chemical Corp.

"So far, geothermal energy's development has been limited by the high initial investment required, but as more local governments are imposing restrictions on coal-fired heat and power generation, geothermal energy will have more room for development," Zhou said at the sidelines of the China Mining conference.

Since July, Beijing has implemented tougher emission reduction requirements on coal-fired power plants that are similar to those in developed nations. Local governments, under pressure to combat choking air pollution, have set ambitious plans to phase out coal-fired heating boilers.

While natural gas is the main replacement fuel, limited supply meant only a limited number of coal-fired boilers could be replaced in the short to medium term.

Geothermal energy coming from the Earth's crust is expensive to develop, but Zhou said projects in locations with good resources were modestly profitable.