China's oil giants -- normally in the news for their massive profits and international expansion -- are making tentative moves into the green fuels sector.

Earlier this month, China National Petroleum Corporation (CNPC), China's largest oil producer, signed an agreement with the Sichuan provincial government to develop bio-fuel in the southwestern basin famous for its agricultural industry and natural gas reserves.

They plan to produce 600,000 tons of automotive-grade ethanol made from sweet potatoes each year and 100,000 tons bio-diesel made from the seeds of jatropha curcas tree.

The CNPC has negotiated with four foreign companies on the introduction of the bio-diesel technology, the company said at its official website.

Soaring oil prices have encouraged world players in the energy industry, including BP, Exxon Mobile and Shell, to attach more attention to developing oil alternatives and other new energies.

As new players in the world energy market, China's oil giants are striving to keep pace in the emerging sector.

China National Petrochemical Corporation (Sinopec Corp.), the country's largest oil refiner, has its listed subsidiary China Petroleum and Chemical Corporation (Sinopec) participating in a coal chemical project in Erdos, in Inner Mongolian Autonomous Region.

The project, with a joint investment of 21 billion yuan (US$2.66 billion) from Sinopec, China's leading coal company China National Coal Group Corp. and three other domestic enterprises are designed to have an annual production capacity of 4.2 million tons of methanol and 3 million tons of Dimethyl-ether (DME) when put into production in 2010.

Sinopec and China Coal each hold a 32.5-percent share in the company.

A major offshore oil player, China National Offshore Oil Corporation (CNOOC) is focusing on wind energy on the sea.

Fu Chengyu, chairman and chief executive officer of CNOOC, said at a company conference last week that it would turn into green energy fields.

Fu said previously that CNOOC was exploring wind-generated power.

The Shanghai Securities News reported on Friday the company was to bid for the first wind power plant in the East China Sea near Shanghai.

With a total investment of 2.12 billion yuan, the project is designed to have a capacity of 100,000 kilowatts.

Preferential government policies encouraging new and renewable energies are another strong incentive behind the oil giants' enthusiasm.

At a State Council meeting on Monday, Vice Premier Zeng Peiyan said the government would raise the proportion of alternative energies in the total energy consumption and oil alternatives would receive priority.

Projects for liquefied coal, bio-diesel, ethanol, solar energy, wind power, and hydropower would be encouraged, he said.

A circular jointly released by five ministries, including the Ministry of Finance and the Ministry of Agriculture, said the government would give subsidies and tax breaks to the bio-energy and bio-chemical sectors.

(Xinhua News Agency November 24, 2006)