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July 17, 2009

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Shell's coal-gas technology questioned

A CHINA industry body has proposed limiting any further purchase of Royal Dutch Shell's coal gasification technology after teething problems at half the plants, but Shell said the glitches were not its fault.

Chinese firms have acquired 19 technology licenses from Shell since 2001 in their bid for a share of the growing market for the clean utilization of coal, which powers around three quarters of the world's third-largest economy. Coal gasification has yet to be widely adopted on a commercial scale.

But the China Petroleum and Chemical Industry Association posted a report on its Website on Wednesday that said 12 units in operation in 11 companies, including refiner and gas producer Sinopec, have all been troubled by unsteady performance. A total of 23 units are now running.

Local firms have encountered a lack of support in trial runs, while some components, most of which had to be imported, were easily damaged and costly to replace, the report said.

Shell (China) Ltd denied there were flaws in its technology.

"Our internal analysis showed that around two-thirds of reliability problems in China were caused by issues outside of the Shell Coal Gasification Process," Lusha Li, Shell China's communication manager, told Reuters.

"Fluctuations of coal feed, sometimes on an hourly basis, have impacted SCGP reliability for some clients, but when clients learned how to better guard their feedstock consistency, the reliability and run lengths went up significantly."

An unnamed official with China's National Energy Administration was quoted as saying in the report that the association had proposed restrictions on technology imports.

"The government should step up controls, restricting the repeated use of Shell's immature technology and encourage domestic firms and research institutes to strengthen adoption and innovation of imported technologies," the association said in the report.


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