Clean Global Energy signs Mongolian UCG project
MONGOLIA - New-era energy company Clean Global Energy Limited (CGE) recently signed a joint venture agreement, worth about $400 million, to form a Hong Kong-based, four-way joint venture company for an underground coal gasification (UCG) project in Mongolia.
The other members of the venture are Inner Mongolia Gu Xin Mining Company Limited, Beijing Yusenjiayu Environmental Protection Technology Company Limited, and Goldbridge Clean Tech Energy. A memorandum of understanding was signed earlier between the companies in August 2009, following which coal sources were reviewed.
CGE is expected to have a 35% controlling interest in the project, which aims to convert a portion of Mongolia's huge coal reserves into synthetic gas (syngas). CGE will invest $350,000 in the venture, which then will attempt to raise $400 million. About $120 million is expected to be procured through raising capital on the Hong Kong Stock Exchange, and the remaining $280 million will be raised through debt. Prior to the listing, an initial funding of $1 million will be raised by each of the venture partners, contributing an amount proportionate to each company's stake in the venture.
The project will be implemented in phases. The project site is the coal deposit of Gu Xin Mining in Inner Mongolia. The deposit has an estimated reserve of 1.8 billion tons. Under a separate commercial operating agreement, CGE will be appointed by the joint venture to design, operate and manage the UGC plant. Through a purchase agreement to be signed with the venture, Inner Mongolia Sukli Oil and Gas Development Company Limited will purchase 5 million to 12 million cubic meters of syngas per day at the best available market price.
High-pressure coal gasification causes less pollution than the conventional industrial usage of coal. UGC releases the untapped energy of coal that is usually not mined through conventional processes for economic reasons. The syngas produced is of high quality and is obtained at low cost. Syngas can be utilized to produce power, ultra-clean diesel, and other fuels and chemicals. UGC has been used successfully in commercial operations for more than 50 years, and CGE aims to become a leading alternate energy company by using the technology. The company uses an advanced process called Controlled Retractable Injection Points that allows greater efficiency and control of the UGC process.
John Harkins, Chairman and CEO of CGE, said that the joint venture agreement signified the recognition of the company's capabilities by international players. Since China is aggressively looking for clean energy options, Harkins believes that this is the perfect time for CGE to be involved in the sector.
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