Construction work began Wednesday on China's first coal-based synthetic oil production facility in Changzhi City, northern Shanxi Province.

The Shanxi Lu'an Coal-based Synthetic Oil Demonstration Factory will have a designed annual production capacity of 160,000 tons, with its core technology developed independently by the Shanxi Research Institute of Coal Chemistry under the Chinese Academy of Sciences.

A state-sponsored new- and high-tech project, the coal-based synthetic oil production facility is undertaken by Lu'an Group in Changzhi City.

According to Ren Runhong, president of the Lu'an Group, the project will take an estimated investment of 1.89 billion yuan (233 million U.S. dollars), scheduled for completion in 2008.

Ren said the coal-based synthetic oil facility will transform low-quality coal with high sulfur content into clean, liquefied fuel as a substitute of oil, which is in short supply worldwide. The new-type fuel can be directly used for cars, with a consumption rate of only 4.5-5 liters per hundred kilometers.

Source: Xinhua