Sail across the sea

Chapter 502: Reserves are even greater than those in the Middle East.

There is no objection to the decision of Maung Lam province to develop large-scale fertilizer production.

However, controversy arose regarding the specific type of large-scale fertilizer plant to be built.

Currently, the available options include two types: imported 30-ton synthetic ammonia and domestically produced 18-ton synthetic ammonia. Imported synthetic ammonia is further divided into four raw material routes: natural gas, residual oil, anthracite, and coal-water slurry.

The natural gas option is the cheapest, with a total investment of 23 billion RMB. However, Maolin Province, and indeed the entire eastern part of China, lacks natural gas, necessitating imports. This is the drawback of this option.

The anthracite coal project also involves an investment of 23 billion yuan, but it has very high requirements for the type of coal. Maung Lam province does not have enough anthracite coal supply and needs to import it from the north, which presents a significant transportation challenge.

The residual oil project required an investment of 30 billion yuan, but the supply of residual oil also faced difficulties, and the project was rejected from the outset.

Coal-water slurry is a new technology with low requirements for raw materials. Various types of high-sulfur coal, low-ash-fusion-point coal, bituminous coal, anthracite, and gas coal can all be used as gasification feedstock. Maung Lam province has relatively abundant coal resources, and the raw material supply can be solved locally. However, the equipment investment for the coal-water slurry project is as high as 35 billion yuan, which is half that of the natural gas project, and it also has the disadvantage of higher energy consumption per ton of ammonia.

The domestically produced 1830 solution also uses coal-water slurry, which has low requirements for raw materials. A new 180,000-ton synthetic ammonia and 300,000-ton urea plant would require an investment of approximately 15 billion yuan. Compared to large-scale fertilizer plants using natural gas, the investment per 10,000 tons of capacity is not significantly different; the main drawback lies in energy consumption after production begins.

The energy consumption per ton of ammonia for large-scale fertilizer production using the natural gas scheme is 30 GJ, while the energy consumption per ton of ammonia for the 1830 scheme exceeds 50 GJ, a significant difference.

However, considering the difficulties in natural gas supply, and the fact that natural gas with the same calorific value is much more expensive than coal, the high energy consumption of the 1830 scheme is no longer a problem.

Xu Ying, Gao Yiping, Zhou Xiaoyun, and other people in the fertilizer system supported the 1830 plan. One reason was the so-called path dependence, that is, they had always used coal as the main source of fertilizer and were familiar with the technology of this system. Another reason was that they considered the convenience of coal supply and did not want to worry about the problem of natural gas imports.

Some provincial leaders, along with macro-level decision-makers from the Provincial Planning Commission and Policy Research Office, favored the natural gas option for several reasons: natural gas is clean and conforms to international practices; large-scale chemical fertilizer production appears high-end and sophisticated, unlike the rustic approach of the 1830 project. Whether there was also a motive to gain some personal advantage through the technology transfer is another matter entirely.

Large-scale foreign investment projects often require overseas inspections and negotiations, creating numerous opportunities for international travel. During the project construction phase, a large number of foreign engineering and technical personnel will come to China to work, and the project owner can use this as a pretext to build luxurious guesthouses and purchase luxury cars, all of which will become the owner's assets in the future. This is a common practice for foreign investment projects.

It's no wonder that, all things being equal, some officials prefer to import projects. Of course, their pretext is to learn advanced foreign technology and "connect with the world."

Regarding the differences between using natural gas and coal as feedstocks, Xu Ying had previously only considered the price and ease of access, at most worrying about the difficulties of importing natural gas due to the need for foreign exchange. She hadn't considered the extreme scenario of foreign sanctions, as Gao Fan had suggested. Now, hearing Gao Fan's words, she suddenly realized that choosing between gas and coal feedstocks wasn't just a matter for Maolin Province; it involved the nation's overall security strategy. The country might have established principles on this issue, and Maolin Province couldn't simply do as it pleased.

“Actually, the natural gas supply isn’t as tight as you’re making it out to be, Xiao Fan,” Gao Yiping said. “We started drilling for natural gas in Sichuan Province in the southwest of our country in the 70s, and I heard that the reserves are quite large. A couple of years ago, a large gas field was also discovered in the Tarim Basin in the northwest. I saw some experts estimate that the reserves are even greater than those in the Middle East, and that they are equivalent to several Qatars.”

“Our country used to be said to be poor in oil, but then oil was found in the Northeast, didn’t it? Now it’s said to be poor in gas, but I think if we keep looking, it’s still very possible to find a large gas field.”

Gao Yiping said this not to argue with his son, but to remind him to pay attention to information in this area. In the 90s, news of the discovery of large gas fields frequently broke in China, and even at the national level, there were discussions on how to utilize domestically produced natural gas.

Gao Fan knew that while natural gas resources in the southwest and northwest had indeed been greatly developed since the beginning of the new century, China's natural gas production still accounted for only 6% of the global total, making it a "gas-poor" country. With increasing household gas demand, China needs to import more than 2000 billion cubic meters of natural gas annually, with an import dependency rate approaching 50%.

In this scenario, if China chooses to "align with international practices," converting coal-fired power plants to gas-fired power plants and switching from coal-based ammonia synthesis to gas-based synthesis, its dependence on natural gas imports could easily exceed 80%, thus posing a significant threat to its energy security.

“Dad, the natural gas in the southwest and northwest is still in the early stages of development. Nobody can guarantee how much it will eventually produce. Even if the natural gas in the southwest and northwest is extracted, it will take at least ten years to build pipelines to transport it to Maolin, right? Can we afford to wait that long?” Gao Fan explained patiently.

Before Gao Yiping could say anything more, Xu Ying stopped him. Xu Ying had specifically inquired with relevant national departments about the Sichuan natural gas issue, and the response she received was similar to Gao Fan's: it was still uncertain, and much of what was being reported in the media was unreliable.

Xu Ying even suspected that the news in the media about the discovery of a gas field in Tarim being equivalent to several Qatars might just be a smokescreen deliberately released by relevant departments to create leverage in certain negotiations.

This kind of thing is fine if it's used to fool foreigners, but if our own people are also fooled and build fertilizer plants based on such expectations, then it's a joke.

“There is another problem, which is the issue of funding,” Xu Ying said. “The Planning Commission just relayed a message from the American company Fair Chemicals that you mentioned. They said they can help Maolin Province obtain a World Bank loan, on the condition that we use Fair Chemicals’ large-scale fertilizer equipment. The provincial leaders think this idea is also very good.”

"That's a good thing," Gao Fan said with a grin. "Since the Planning Commission has such ability, let them apply for a World Bank loan. Why is Aunt Xu worrying about them?"

(End of this chapter)