China is dusting off a 15-year-old energy project it once decided wasn't worth building. The reason is simple: Iran.
State-owned China Datang is restarting construction on a coal-to-gas plant in the northeastern city of Fuxin. The project was first announced in 2011. It was shelved in 2014. It's now set to come online in October.
Coal-to-gas plants take cheap domestic coal and turn it into synthetic natural gas that can be piped to customers. The tech was sidelined a decade ago for being too polluting and financially risky. Gas was cheap. Coal was out of fashion.
That math flipped. Gas prices spiked when sanctions and war disrupted Middle East shipments. Qatar - China's biggest Middle East gas supplier - sent 28 billion cubic meters to China in 2025. Those flows got hit when Iran stopped traffic through the Strait of Hormuz.
So China is reaching for the fuel it has a lot of. Coal.
Fuxin is just the start. China has 13 more coal-to-gas projects either under construction or in planning. If the full pipeline gets built, synthetic gas output could grow almost sevenfold to 52 billion cubic meters a year. That's roughly 12% of the country's total gas supply.
Xinjiang - home to most of the new projects - has ultra-cheap coal. BloombergNEF estimates production costs there would translate to $5 to $9 per million British thermal units. Asian spot prices for imported gas hit $25 during the Iran war before settling in the mid-teens.
In plain English: making gas from Xinjiang coal costs a fraction of what it costs to buy gas on the open market right now. That's the whole pitch.
For investors watching global energy flows, this is a slow-motion shift. Plants take up to five years to build. The projects won't replace Middle East gas overnight. But they change the ceiling on how much leverage a place like the Strait of Hormuz has over China's fuel bill.
One closed plant doesn't reopen itself. A war does it.
Source: Japan Times
