China's Jovo Rises on $485M Investment in Coal-to-Gas Venture

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Shares of Jovo Energy surged following the announcement that the company plans to invest up to CNY3.5 billion (approximately USD485 million) in a significant coal-to-natural gas project in western China. The company’s stock closed up 6.9% at CNY34.69 (USD4.87) in Shanghai, after reaching the 10% daily trading limit earlier in the day.

Jovo will serve as an industrial investor in the second phase of a large-scale coal-to-natural gas facility located in Yining, Xinjiang Uygur Autonomous Region. This project is expected to have an annual natural gas output of 4 billion cubic meters. The firm revealed that the first phase, which has already been completed, produces 1.5 billion cubic meters annually and has been operating at full capacity due to high demand.

The second phase of the project involves an investment of around CNY22 billion (about USD3.1 billion). Alongside Jovo, other investors include Xinjiang Qinghua Energy Group and an investment fund managed by the Henan provincial government. Collectively, these investors will contribute CNY7.1 billion, with the remaining funds projected to be secured through loans from financial institutions.

Upon completion within approximately 36 months, and once operational, Jovo will hold a 50% stake in the project’s natural gas production rights proportional to its investment. The second phase is projected to consume nearly 11.8 million tons of raw coal annually, sourced from local mines in Yining. Water consumption for the project is expected to surpass 22.3 million cubic meters each year, and permits for water use have already been obtained.

The natural gas produced will be distributed via the main pipeline of the West-to-East Gas Transmission Project, supplying various regions across China. Last year, China imported nearly 43% of its natural gas to meet domestic needs. The company emphasized that this initiative will help reduce China’s reliance on imported energy, support its green development goals, and improve its resource diversification. It will also help Jovo address its natural gas supply shortfall and expand its resource base.

The parent company of Xinjiang Qinghua Energy, a major private enterprise, specializes in producing coal-based clean energy and refined chemicals. It is notable for being the world’s first company to operate a commercial coal-to-natural gas plant.