OREANDA-NEWS. June 24, 2011. China expects it will be able to show by 2015 that it is viable to build coal-based methanol-to-olefins and methanol-to-aromatics plants in the country that can compete with plants that are naphtha-based, Yi Bai, vice president of China's National Petroleum and Chemical Planning Institute, or NPCPI, said Thursday.

Speaking at the China Petrochemical Focus 2011 conference being held in Shanghai over June 23-24 and which is organized by China Decision Makers Consultancy, she said that in a few years time it would be clear that it was not mere optimism that led to the construction of these plants, and that they were using proven technologies.

Bai was also optimistic that the projects would succeed due to high crude oil prices. "Crude oil prices over 2011-2015 will be higher than in the previous five years," Bai said, noting that this would give support to the development of coal-gas derived methanol-based petrochemicals.

The coming five years will see plants coming on line in China that can produce all kinds of petrochemicals such as olefins and aromatics from coal-gas based methanol, but for many of these plants technology is still experimental and they often function as pilot plants.

According to Platts data, there are at least five major methanol-based petrochemicals plants online, with 13 plants and expansions being built or in the preparation phase.

The reason that China is embarking on developing coal-based industries is that the county has large coal reserves compared with far smaller natural gas and crude oil reserves.

The problem, however, is that a lot of China's coal is low grade, and it needs different technologies to be turned into petrochemical building blocks.

Also many of the coal reserves are far inland, and as it would be expensive to move the coal to the coast, downstream industries will have to be increasingly built inland.

The China National Petroleum and Chemical Planning Institute is entrusted by the National Development and Reform Commission with industrial planning research and engineering consulting in the petroleum and chemical sectors.