CNOOC Chemical's 1.2 million-ton/year gas-to-methanol project was approved, and the methanol pattern of South China's gas head was reshaped.

1. basic project information

on November 3, CNOOC Chemical announced the feasibility study of the 1.2 million-ton/year natural gas-to-methanol project. The project landed in Dongfang City, Hainan Province, China, and was implemented by a wholly-owned subsidiary, Fudao Company. The installation of supporting utilities consumes about 1.716 billion cubic meters of natural gas annually. It is planned to start construction in December 2027 and put into operation in December 2029. After the project was put into operation, the total methanol production capacity of the enterprise rose to 2.6 million tons/year, and the annual utilization scale of natural gas in the base exceeded 5 billion cubic meters.

China's Hainan Fudao Factory is a methanol production base for South China's head gas head. It currently has a methanol production capacity of 1.4 million tons/year, urea of 1.32 million tons/year, acrylonitrile of 270000 tons/year, and is equipped with a deep-water port of 18.28 million tons/year. Its products can reach 99.98 excellent products. In 2025, the products were supplied with commercial space rocket raw materials. The gas source is from Dongfang 1-1, Dongfang 13-2, Ledong and Shenhai No.1 gas field group. The project adopts the route of CO₂-rich natural gas to methanol, supporting the demonstration project of carbon injection and gas enhancement in Dongfang 1-1 gas field. Every year, the seabed will store more than 1 million tons of CO₂, forming a closed loop of carbon injection and gas drive and carbon-rich gas resource utilization.

2. Market and Industry Interpretation

in the first half of 2026, China's methanol market was disturbed by geopolitical factors in the Middle East and fluctuated at high levels. Geopolitical risks pushed up prices in the first quarter. In the second quarter, Iran's installation was under low load. Domestic methanol imported 3.315 million tons from January to May, down 18.2 year on year. In May, it arrived in Hong Kong only 40-500000 tons, far lower than 80-1.2 million tons in the same period in previous years. The low level of port inventory supported the price, and then the price fell as the situation eased. In the first half of the year, China's Hainan Fudao factory produced 720000 tons of methanol and sold 723000 tons of methanol. Methanol revenue was 1.7589 billion billion yuan, an increase of 0.1661 billion yuan or 10.4 percent over the same period last year. Price increases offset the impact of a slight decline in sales. After the market methanol supply and demand overall loose, the probability of a wide range of shocks.

China's methanol production capacity is dominated by coal-based routes, and the proportion of gas head production capacity is low. Compared with China's Inner Mongolia coal methanol, the ex-factory cost of 2200-2300 yuan/ton, shipped to China's East China port reached 2400-2500 yuan/ton, Hainan Fudao plant relying on CNOOC's own offshore gas field, gas source stability is stronger, superimposed on the existing base storage and transportation, public auxiliary facilities sharing, investment cost is better. The project construction cycle is close to 2 years, the production time falls at the end of 2029, the cycle fluctuation risk is significant, enterprises through the intelligent transformation of the device, expand high-end orders to hedge the risk.

For overseas traders, the project will fill the local methanol supply gap in South China, change the region's dependence on imported sources, and at the same time extend the reserve of raw materials for enterprises to downstream high-end new materials. According to the in-situ conversion of carbon-rich natural gas in Nanhai, the project will reshape the distribution, pricing and export supply structure of methanol in South China in the long term, requiring continuous tracking of production progress, natural gas costs and the pace of global methanol arrival.