China’s big oil looks to biofuels

Biodiesel and ethanol are high on the radar of China’s big oil companies. According to the People’s Daily on Friday last week China’s oil giants explore biofuels in their vision of the future…


China’s oil giants…are making tentative moves into the green fuels sector. Earlier this month, China National Petroleum Corporation (CNPC), China’s largest oil producer, signed an agreement with the Sichuan provincial government to develop bio-fuel in the southwestern basin famous for its agricultural industry and natural gas reserves.

They plan to produce 600,000 tons of automotive-grade ethanol made from sweet potatoes each year and 100,000 tons bio-diesel made from the seeds of jatropha curcas tree. CNPC has negotiated with four foreign companies on the introduction of the bio-diesel technology, the company said at its official website.

Is there a pattern here, with my earlier post today about Shell’s biofuel bets. This points up the need for consolidation in the fuel ethanol and biodiesel sectors. If large companies like Shell and CNPC are actively involved then, providing they feel that they can make enough money from biofuels they will move in. It would be a mistake to think that big oil is made up of dinosaurs and biofuel players arethe smart mammals that will out evolve them. companies like Shell,BP, and ExxonMobil have not been around for over 100 years without changing.

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One Response to China’s big oil looks to biofuels

  1. clive richardson 29 November, 2006 at 7:26 am #

    There’s nothing tentative about the big oil and gas compainies interests in Bio Fuels.

    World wide, delivery to the market, they are systematically being forced into complience with new regulations that demand inclusion of a percentage of Bio Fuel in the mix.

    Bio fuels add elasticity to the supply of fossil fuel and while they still cost more per gallon to produce, at this time, the investments by the oil giants will pay off rapidly as economies of scale kick in on the agriculture to industrial bio fuels matrix.

    Demand for energy is not about to go into sharp decline. Energy demand in all its forms is going to continue to expand and there should be no mistaking that owners of the infrastucture platforms for traditional distribution will take every opportunity to enlarge their already massive footprint to accommodate end to end solutions for integrating bio fuels into the mix. This is logical and, very good for the emerging triple bottom line accounting methodologies that numerous development policy specialists have been promoting for quite a number of years.

    Each and every “green fuel” protagonist has to realise that the oil majors are their complimentary partners not competitors.

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