Synthesis Energy Systems Inc (SES), a Houston-based company focusing on advanced energy gasification technology, announced on Monday a strategic joint project development and investment agreement with China Environment State Investment Co Ltd (CESI).

SES and CESI have agreed to jointly develop, invest and build a total of no fewer than 20 projects using SES gasification technology (SGT) over the next five years. At the initial stage, SES and CESI are looking to bring a minimum of two projects within 12 months.

Equity in the projects for investment by SES and CESI is expected to be owned 51 percent by CESI, and 49 percent by SES through SES' wholly owned Hong Kong subsidiary, SES Clean Energy Investment Holdings Ltd.

This is the first of several equity-participation collaborations SES is working on with governments and leading companies in China and internationally.

CESI is a state-owned enterprise established in Beijing under the Ministry of Environmental Protection of China. It is funded to develop and invest in the energy conservation and environmental protection industry.

SES develops technology transforming all grades of coal, coal wastes, renewable biomass and industrial wastes into clean syngas.

According to the announcement, SES and CESI have identified potential projects and intend to focus initially on four target projects: an industrial fuel syngas project in Inner Mongolia for an industrial park with planned expansion in Phase II; an industrial hydrogen and fuel syngas project in Shandong province; and two industrial park syngas projects, in Shandong and Hebei provinces.

The projects vary in size, and the estimated total installed costs of the four projects range between $75 million to more than $400 million per project.

"We are excited to be working with the China Environment State Investment Company and its dynamic and forward-looking Chairman Wang Wei and to become an integral part of the Chinese government's mandate to develop and invest in energy conservation and environmental protection," said Lorenzo Lamadrid, SES chairman.

SES had launched numerous projects in China since 2008. "We are building on the success of our China joint venture plants and the Aluminum Corporation of China projects," said DeLome Fair, SES president and CEO.

"This agreement follows our strategic industrial growth model: to deploy SES' clean energy technology through project participation in energy markets that are large and growing. This enhances the company's value proposition and enhances and propels our technology and equipment sales."

CESI Chairman Wang Wei also is excited to partner with SES. "The SES Gasification Technology has shown unmatched, superior performance for economic, clean energy and all target projects are encouraged by the Chinese government," Wang said.

"Due in large part to the early success of SES' Aluminum Corporation of China industrial fuel projects, we are most eager to bring this advanced clean energy technology to benefit industrial customers and Chinese citizens alike in Inner Mongolia, and Shandong and Hebei provinces, and intend to replicate this cleaner energy model throughout China."

Final investment decision criteria established by the parties is anchored on projected rates of return of 20 percent or greater; reliable fuel supply, and reliable product off-take contracts or customers. The financing structure for the target projects is expected to be up to 30 percent equity, 70 percent debt.

"Our aim is to bring clean energy technology to global markets where natural gas is expensive and where cleaner energy is needed to meet growing demand. We look forward to bringing Growth With Blue Skies to points far and wide across China and along its Silk Road," said Robert Rigdon, SES vice-chairman.

mayzhou@chinadailyusa.com