GAIL (India) Limited, India’s top natural gas company, will set up a joint venture with China Gas Holdings Limited <384> through its overseas arm, GAIL Global Singapore, to increase its investment in China, an executive from the company disclosed.

It would be a 50:50 JV and incorporated in either Hong Kong or Bermuda. Three projects will be launched, including a compressed natural gas (CNG) project in Beijing, a coal-bed methane (CBM) project in Mongolia and a coal-based petrochemical plant in Yulin.

Due to the shortage of oil deposit and the abundance of coal reserve in China, coal-based petrochemical technology is important for China’s fuel industry. There are around a dozen projects to produce fuel from coal, including Xinwen Mining Group’s 10 million-ton coal-to-oil project in Yili, Shanhua’s 5 million-ton coal-to-oil project in Erdos and Sinopec’s 3 million tons coal-to-dimethylether (DME) project in Erdos.

Besides GAIL, which owns around 6.5% stake in China Gas, Asian Development Bank, Sinopec<600028><386> and Oman Oil are also the stock holders of China Gas.

China Gas is a natural gas services operator, engaging principally in the investment, operation and management of city gas pipeline infrastructure, distribution of natural gas to customers, construction and operation of gas stations, and development and application of natural gas related technologies.