Our Bureau

New Delhi, Sept. 5

GAIL (India) Ltd has signed a memorandum of understanding with Shaanxi Huashan Chemical Industry group of China to undertake coal gasification activities in the Shaanxi province.

It plans to invest in conversion of coal to methanol and eventually into petrochemicals, according to a company release.

According to the MoU, GAIL will conduct a feasibility study for setting up a coal gasification-based petrochemical plant for production of polyolefins and other products in Shaanxi province. Shaanxi province has abundant quantity of coal, which can be availed at competitive prices. The MoU has been signed by the GAIL Chairman and Managing Director, Mr Proshanto Bannerjee, during his recent visit to China.

According to the plan, the two companies will subsequently consider setting up of a joint venture for implementation of the proposed project and to set up distribution and marketing network in China.

Shaanxi Chemical is operating a fertiliser plant based on old coal gasification technology and is willing to adopt the modern Shell coal gasification technology to upgrade its plant.

Sinopec, the major oil and gas company of China, is working on the application of Shell technology for coal gasification for production of ammonia, which is eventually used for production of urea.

During discussions, Mr Chen Qi, Director General, Sinopec, has agreed to share their experiences with GAIL regarding the construction, operation and commercialisation aspects of coal gasification-based projects.

Sinopec has also agreed to develop a cooperation framework with GAIL for coal gasification projects, apart from gas transmission and distribution business after detailed discussions and identification of projects for joint implementation.

GAIL will be using domestic coal to produce synthesis gas or `syngas' by using Shell Coal Gasification Process (SCGP), which will used for the first time in India. SCGP has an inherent capacity of handling high ash content coal, which is available in India.

The company also plans to set up a Rs 750-crore coal gasification project in eastern India with coal handling capacity of 2,000 tonnes per day to produce 3.4 MMSCMD of syngas.

Industries in eastern India, which run on liquid fuel, will save huge costs when they use synthesis gas that can be made available at $3 per mmbtu.

GAIL's focus in eastern India is primarily due to the availability of abundant amount of coal in West Bengal, Bihar, Jharkhand and Orissa.

The identified locations for setting up the project are Haldia, Durgapur and Talcher.

(This article was published in the Business Line print edition dated September 6, 2005)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.