China Buys Air Products' Technology For New LNG Plant As Nation Fights Rising Pollution

The Chinese liquefied natural gas (LNG) market got a boost Wednesday when Air Products & Chemicals Inc. (NYSE:APD), one of the world’s largest providers of LNG technology, inked a deal to supply energy company Technip (Otcmkts:Tkppy) with equipment vital to natural gas liquefaction.

The world’s biggest emitter of carbon dioxide, China has been trying to enhance its clean-energy policy, and natural gas fits that goal. China’s State Environmental Protection Agency said that pollution cost the national economy more than $200 billion in 2006 alone.

Technip plans to use the equipment for a planned liquefaction and purification plant that will produce 500,000 tons of LNG per year in the Yangling Demonstration Area in Shaanxi province, according to Air Products' press release.

The contract is valued at approximately $46.6 million and covers engineering study and basic engineering design of the plant, rigzone.com reported.

“This project acknowledges Technip’s historical and unique LNG expertise but also reinforces its continuous involvement in the growing mid-scale LNG market in China, after the success of the Ningxia Hanas LNG plant,” Technip said.

In 2011 Technip delivered its first LNG plant to China-Ningxia Hanas, a mid-scale LNG plant that has the capacity to produce 800,000 tons of LNG per year.

China’s economy is continuing to grow rapidly, and the nation became the world's biggest energy consumer in 2009. Last year China's Ministry of Finance said it would spend around $27 billion on improving energy efficiency and building renewable-energy infrastructure; for perspective, that means that in only one year’s time, the government will spend half what it spent in the five years from 2007-2012 on such improvements.

And they are urgent, as China's air pollution has become a toxic dilemma for the country. A recent study claimed the country’s rampant pollution has enormous impact on the health -- and mortality -- of people living in China, particularly those in the north. The research, which utilized more than 20 years of data and was headed by four economists -- two in China, one in the U.S. and another in Israel -- used air-quality readings from 90 different Chinese cities between 1981 and 2000, cross-referenced with the mortality data of 145 locations all across the country from 1991 to 2000.

The situation has gotten so bad that China is planning to impose restrictions on new-vehicle purchases in eight more cities, in addition to existing curbs in four major cities -- Beijing, Shanghai, Guangzhou and Guiyang -- to control traffic congestion and air pollution.