China's CNPC to build ethanol plant in Shandong

BEIJING, March 4 (Reuters) The China National Petroleum Corp. (CNPC) has signed an agreement with the northeastern Shandong provincial government for a biofuel energy project, state media reported on Sunday.

The Xinhua news agency said the agreement includes construction of a demonstration facility in Shandong for the production of 200,000 tonnes of ethanol per year as well as 100,000 tonnes of bio-diesel annually.

The unit will also carry out research and marketing for the ethanol and bio-diesel in Shandong.

CNPC, the Chinese oil and gas major, aims to achieve capacity of 2 million tonnes of non-grain alcohol per year by the end of 2010, including 200,000 tonnes from wood, according to the report.

China last month said it would earmark 200 million acres (13.3 million hectares) of woodland for biomass energy development to help meet the country's soaring energy demand and to help ease environmental degradation caused by fossil fuels.

Earlier this year, CNPC signed an agreement to cooperate on planting trees over more than 600,000 acres in Yunnan and Sichuan provinces, aimed at producing 60,000 tonnes of biodiesel a year.

CNPC is the parent of Hong Kong and New York listed PetroChina .

REUTERS DKS PM1522