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CNPC in talks for ethanol firm stake

By Winnie Zhu (China Daily)
Updated: 2007-03-15 10:41

China National Petroleum Corp (CNPC), the nation's biggest oil producer, and BP Plc are among the companies that are in talks with Guangxi Xintiande Energy Co about buying a stake in the southern China ethanol producer.

The talks include setting up joint ventures to tap China's growing renewable energy market, Chen Ling, deputy general manager of Guangxi Tiansheng Port Co, which shares the same parent company as Xintiande, said yesterday. The discussions are at an initial stage, Chen said.

China plans to double fuel ethanol consumption to 10 million tons in the 10 years to 2020, China Agri-Industries Holdings Ltd, the nation's largest rice producer, said in February.

The government is promoting the use of ethanol gasoline to cut emissions and fuel imports as car demand rises.

"Both China National Petroleum and BP are aiming to expand their market share in renewable energy," Chen said.

Xintiande runs southern China's largest ethanol plant, he said. The plant can produce 100,000 tons of the fuel from cassava annually.

China is encouraging ethanol production from non-grain crops such as cassava to ensure domestic grain supply. The government is giving tax breaks and financial subsidies to producers of the additive made from fermenting and distilling starch crops.

"CNPC has started building its refinery in Guangxi and it really needs ethanol to blend with gasoline produced from the plant," Chen said.

"It will be beneficial for Xintiande to cooperate with CNPC as State oil companies enjoy subsidies for ethanol projects."