Interfax-China reported that China should restrict approval of coal to gas projects that produce less than two billion cubic meters of natural gas annually due to cost concerns.

Mr Liang Longhu a senior expert from China Petrochemical Corp Luoyang Oil and Petrochemical Design Institute said the viability of such small scale projects is being threatened by high coal prices which have surged following the disaster at Japan's Fukushima Daiichi nuclear plant in March.

He said "Coal-to-gas projects are very vulnerable to rising coal prices as the cost of coal accounts for more than 60% of these projects total cost. He added that in addition, the expense of laying natural gas pipelines makes small sized coal to gas projects uneconomical. Such projects already face pressure on environmental grounds as they consume large quantities of water and emit significant amounts of carbon dioxide.

According to the China Petroleum and Chemical Industry Federation, China has more than 30 coal to gas projects planned or under construction. Those projects have a combined annual natural gas production capacity of approximately 150 billion cubic meters.

(Sourced from Interfax-China)