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Third Investigation into the Development of the Energy and Chemical Industry in Xinjiang – Coal chemical demonstration projects are eagerly awaiting policy support. Author/Source: Sinochem News Network. Date: 2019-12-16. Clicks: 26. From December 4th to 10th, a research team focused on the development of the energy and chemical industry in Xinjiang, led by Cui Xuejun, the editor-in-chief of China Chemical News, visited the Xinjiang Uygur Autonomous Region for the third time. Through in-depth investigations at 18 petroleum and chemical enterprises as well as industrial parks, the research team learned that China’s first demonstration project for producing ethylene glycol from natural gas has been completed and put into operation, with plans to extend its application to the polyester fiber industry. However, the progress and operational performance of local coal-to-oil and coal-to-natural gas projects have not been satisfactory. With the establishment of the oil and gas pipeline company, which the industry has been awaiting, companies are calling for relevant policies to be implemented as soon as possible, so that these modern coal chemical demonstration projects can fulfill their intended role. The enterprises and industrial parks visited as part of this investigation included: Xinjiang Xingfa Chemical Co., Ltd., Aksu Hongsheng Chemical Co., Ltd., Wensu County Xinda Chemical Co., Ltd., Alar Zhongtai Textile Technology Co., Ltd., Xinjiang Production and Construction Corps Tianying Petrochemical Co., Ltd., Baicheng County Zhongtai Coking Co., Ltd., Xinjiang Junxin Chemical Co., Ltd., Xinjiang Jinhui Zhaofeng Energy Co., Ltd., CNPC Tarim Oilfield Klara 2 Gas Field Treatment Station, Aksu Huajin Fertilizer Co., Ltd., Aksu Xinlianxin Compound Fertilizer Co., Ltd., Ili Xintian Coal Chemical Co., Ltd., Xinjiang Qinghua Energy Group Co., Ltd., Yitai Ili Energy Co., Ltd., as well as the Aksu Economic and Technological Development Zone, Wensu County Industrial Park, Alar Economic and Technological Development Zone of the First Division of the Xinjiang Production and Construction Corps, Kuqa Economic and Technological Development Zone, and others. The Alar Economic Development Zone focuses on the development of the chemical and textile industries. The natural gas-based ethylene glycol production project with an annual capacity of 300,000 tons, built by Tianying Petrochemical within the park (with the first phase having an annual capacity of 150,000 tons), is the first of its kind in China for producing ethylene glycol from natural gas. In August, the process was successfully operationalized to produce high-quality ethylene glycol, and the facility is currently operating normally. Hu Ze, the general manager of the company, said that on this basis, the company will build on Xinjiang’s existing PX and PTA projects to further expand into the polyester fiber industry and develop downstream fiber, textile, and apparel products. Zhongtai Textile Technology Co., Ltd., also located in the Alar Economic Development Zone, is one of the downstream projects of Zhongtai Group aimed at optimizing its industrial structure and establishing a complete industrial chain; it currently has a production capacity of 340,000 tons per year for viscose fiber and 80,000 tons per year for pulp. Two coal-to-natural gas projects and one coal-to-oil project located in Yining caught the attention of the research team. Qinghua Energy Company has planned a coal-to-natural gas project with an annual capacity of 5.5 billion cubic meters in the area. The first phase of this project, with an annual capacity of 1.375 billion cubic meters, began supplying gas to the West-East Gas Pipeline Network in December 2013; it became the first coal-to-gas project to be completed in China. Over the past 6 years since its operation, a total of 4.6 billion cubic meters of gas have been produced. China’s largest single coal-to-natural gas project, Xintian Coal Chemical’s 2 billion cubic meters per year coal-to-gas facility, was put into operation last year; production is expected to exceed 1.6 billion cubic meters this year. However, the operational results of the above two projects were not satisfactory. The research team found that inverted prices for coal-to-natural gas and monopolies in oil and gas pipelines are the main factors contributing to the project’s losses. Zhu Hongwei, chairman of Xintian Coal Chemical Industry, and Li Xuguang, deputy general manager of Qinghua Energy, believe that with the establishment of the Oil and Gas Pipeline Corporation on December 9, the coal-to-gas industry will benefit from this development, and the current situation is likely to improve gradually; however, the issue of project losses is unlikely to change in the short term. They called for the early implementation of relevant policies to support the development of modern coal chemical industry. For the 1 million tons per year coal-to-oil demonstration project under construction by Yili Energy, all the preliminary supporting documents have been obtained; the construction of the underground pipeline network, as well as parts of the main structural framework and related equipment, is largely complete, with a total investment of around 7 billion yuan already made. However, due to the heavy tax burden on coal-to-oil products and difficulties in securing project financing, the project was forced to suspend construction. Wang Jintang, the company’s chairman and general manager, told the research team that it is recommended to **take full account of the special nature of coal-to-oil as an emerging industry, and implement a differentiated consumption tax policy on refined oil products for the time being. The themed research on the development of Xinjiang’s energy and chemical industry is titled “Connecting with the Belt and Road Initiative and Planning for the 14th Five-Year Plan.” It is guided by the Department of Industrial Coordination of the National Development and Reform Commission, the Department of Policies and Regulations of the Ministry of Ecology and Environment, and the China Petroleum and Chemical Industry Federation. It was jointly initiated by the China Chemical Industry News, the China Chemical Industry Development Research Institute, the Shanxi Clean Energy Research Institute at Tsinghua University, and other organizations. The research was aimed at examining the current development status, existing problems, and future plans for Xinjiang’s energy and chemical industry, as well as summarizing the achievements and experiences gained. This information is intended to serve as a reference for formulating development strategies for the petroleum and chemical industry during the 14th Five-Year Plan period. The project received strong support from relevant departments of the Xinjiang Uygur Autonomous Region, as well as companies such as Xinjiang Zhongtai Group, Xinjiang Guotai Xinhua Chemical Company, Sinochem Saiding Engineering Company, Shanxi Lu’an Chemical Co., Ltd., Shanxi Yangmei Chemical Machinery Group, and Zhongke Lu’an Energy Technology Company.