Shell Cuts Back on Chinese Projects

Royal Dutch Shell PLC is delaying or dropping some alternative-energy projects in China as too costly, given current oil prices, executives said Tuesday.

Lim Haw-Kuang, executive chairman of Shell Companies in China, said in Beijing that because of the economic downturn, it decided to postpone a joint venture with Shenhua Group, China’s top coal producer and parent of China Shenhua Energy Co., to turn coal into liquid fuel.
Shell had conducted a feasibility study with Shenhua to build a coal-to-liquid plant in the country’s western Ningxia Autonomous Region. Shenhua has been independently pursuing coal-to-liquid projects with its own technology in the country’s Inner Mongolia region, but the collapse of oil prices and China’s scarcity of water resources have made many of these projects unviable.

Mr. Lim said coal gasification — turning coal into gas, often for use as a feedstock for making chemicals — has been a strong driver of Shell’s growth in China. It has reached 20 licensing deals in recent months with Chinese companies to use Shell technology. He didn’t name any of the companies.

Shell executives said they have also abandoned a foray in northern China into oil shale, a costly and technologically challenging type of oil to produce.

Wall Street Journal (through Google News)