Total investment of 362.4 billion! China’s largest strategic base for coal-to-oil and gas production comes online

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On September 11, the Development and Reform Commission of the Xinjiang Uygur Autonomous Region held a meeting to discuss the planning for the coal-based oil and gas strategic base in the Zhundong Economic and Technological Development Zone (hereinafter referred to as the “Zhundong Development Zone”). After listening to the report on the plan for this development work, relevant leaders from the district and provincial development and reform commissions, as well as the management committee of the Junggar Development Zone, put forward reasonable suggestions regarding the planning outlined in the preliminary plan for Xinjiang’s coal-to-oil and gas strategy base. This plan calls for an integrated, centralized, and park-based approach to the development of the coal-to-oil and gas strategy base in the Junggar Development Zone, with the aim of achieving combined production of oil, gas, and chemicals, thereby creating the largest such strategy base in China with distinct characteristics unique to Junggar. These suggestions are intended to contribute to ensuring energy security. The plan for the Jungdong Development Zone includes the construction of two bases for coal-to-oil production with simultaneous generation of natural gas and chemicals, each with a capacity of 5 million tons; as well as a base for coal-to-natural gas production with simultaneous chemical production, with a capacity of 24 billion cubic meters. The total investment amounts to 362.4 billion yuan, while the total output value is 133.5 billion yuan. A capacity of 30 million kilowatts of new energy facilities has been established to supply green electricity, green hydrogen, and green oxygen for coal-to-oil and coal-to-gas processes. The meeting noted that this planning scheme was developed on the basis of the **NDRC’s call to establish coal-to-oil and gas production bases in Zhundong and Hami in Xinjiang. This planning scheme is not only part of the energy strategy framework for the 14th Five-Year Plan, serving to ensure energy security, but it also represents a significant opportunity for Xinjiang to implement its national economic development plan for the same period. It facilitates the implementation of relevant policies and the actions outlined in the Zhundong plan; it contributes to ensuring energy strategic security by leveraging the strengths of Zhundong, provides support for healthy economic development, explores models for accelerating industrial progress through Zhundong’s approach, and offers guidance for the healthy development of enterprises. The meeting on that day also discussed matters related to the planning of Xinjiang Hami’s coal-to-oil and gas strategic base. It is reported that on March 12, 2021, the \"14th Five-Year Plan for National Economic and Social Development of the People’s Republic of China and the Long-Range Objectives Through the Year 2035\" was officially released. The Plan Outline introduces for the first time the guiding principle that \"core oil and gas demands must be met through self-sufficiency,\" which is of great significance for clarifying the role of the coal-to-oil and gas industry. Explicitly designate coal-to-oil and gas bases as one of the “economic security projects”. It is proposed to \"progress steadily with the development of strategic coal-to-oil and gas production bases in Ordos in Inner Mongolia, Yulin in Shaanxi, northern Shanxi, Zhundong in Xinjiang, and Hami in Xinjiang, while establishing capacity and technical reserves.\" Based on the information disclosed in the Plan Outline, the location of coal-to-oil and gas production bases is determined primarily by the availability of coal resources, with these bases mainly concentrated in the Ordos Basin and Xinjiang – areas where China’s coal production capacity will further concentrate in the future. The proposal of strategic bases for coal-based oil and gas also means that the industrial development model will evolve from \"project-based demonstration\" to \"base-based layout\". To date, in the field of coal-based oil and gas production, a range of process technologies such as coal gasification, direct coal liquefaction, and indirect coal liquefaction have been developed with independent intellectual property rights, and the degree of domestic production for related equipment exceeds 98%. The million-ton-scale demonstration projects for coal indirect liquefaction and coal direct liquefaction are both operating steadily, while coal-to-natural gas projects are gradually achieving high-capacity operation. During the construction and operation of these demonstration projects, relevant experience and achievements in technology research and development, engineering design, construction management, equipment manufacturing, and plant operation were developed and accumulated, thereby building a strong foundation for the further development of the industry; the overall capability of this industrial system has reached world-leading levels.