Sinopec Group is China’s largest petroleum and petrochemical company and the fifth largest company in the world according to the Fortune Global 500 for 2011. Its main operations are related to the production and distribution of oil, gas, coal and other sources of energy, along with a variety of related operations and various chemical industries. In recent years, the company has directed its attention to harnessing geothermal power and sustainable energy production through its subsidiary Sinopec Star Petroleum Company Limited, which has a 51% holding in SGE together with the 49% holding of Orka Energy. Orka Energy became involved in the project last year when it acquired the operations of Geysir Green Energy and REI.

SGE has about 260 employees, and the company currently heats in excess of 6 million m² of commercial and residential buildings with geothermal power. The newly made agreement allows for the company’s owners to invest up to an additional USD 60 million going forward. The plan will expand heating operations to a target of 30 million m² by the end of 2015 and 100 million m² by the end of 2020. In addition to this, a project will be launched related to electricity production and to other environmentally friendly uses of geothermal power.

Fu Chengyu, Chairman of the Board of Sinopec Group said, “I’m extremely pleased with the ambitious objectives set by SGE for the coming years. Cooperation with Orka Energy has worked well, and it is both enjoyable and inspires confidence to have Icelandic ingenuity and knowledge by our side for the tasks ahead of us.”

Haukur Hardarson, Chairman of the Board of Orka Energy remarked, “This agreement underlines the good cooperation that has existed between the parties in the past years and the reciprocal trust that has developed between us. We will make every effort to employ, in a variety of ways, the significant knowledge that exists in Iceland on harnessing geothermal energy, both through consultancy and through participation by Icelandic parties in the development and operation of geothermal projects throughout the world.”

Press release from the Prime Minister’s Office

The meeting included detailed discussions about co-operation in research and development on geothermal resources and technology to broaden and strengthen the utilization of geothermal energy in China. Such research would take place both in Iceland and in China. Furthermore, they discussed harnessing geothermal energy for such uses as space heating, electricity generation, greenhouse cultivation, medical spas and the drying of food products.

Orka Energy and SINOPEC have agreed to expand their current co-operation on geothermal projects in China significantly. This co-operation has long been a topic of great importance to both countries ever since the visit of Jiang Zemin, Former President of China, to Iceland in 2002 and has included many meetings of President Grimsson with the President of China Mr. Hu Jintao and Premier Wen Jiabao.

SINOPEC’s Chairman declared that his company had decided to make co-operation with Iceland, Orka Energy and the Icelandic geothermal cluster a priority issue in the company’s energy policy in the coming years.

Press release from President’s office (in Icelandic)

They visited two heat centrals and debriefed a report by Mr Yang Rongliang , GM of SGE.

News release from SGE

The project is the world’s first geothermal heating project under the CDM, part of the United Nations Framework Convention on Climate Change.

The project marks SINOPEC and SGE’s entry into the international carbon-trading market.

The CDM is a project-based arrangement under the Kyoto Protocol with the aim to reduce greenhouse gas emissions.

The news on China Daily

The program is the result of cooperation between CCTV and the Icelandic
Embassy in Beijing that includes the recording of three television programs
featuring Iceland. The project was initiated last year on the 40 year Anniversary
of Diplomatic Relations between Iceland and China.

Professor Páll Valdimarsson of Reykjavik University was a special guest of the
geothermal program along with Ambassador Kristín A. Árnadóttir of Iceland.
Furthermore, Mr Wang Yongxin, vice-secretary of Baoding City, Ms Li Hongying,
Director of the Baoding Municipal Geothermal Administration, and Mr Ma Yufeng,

Deputy Mayor of Baoding, appeared in the program. Hafnafjordur, a township in
Iceland, is the sister city of Baoding. In addition, a number of Chinese geothermal
experts, who have received training at the United Nations University Geothermal
Training Program in Iceland, appear on the program.

Among issues discussed in the program were the development of Icelandic
society and how Icelanders enjoy warm swimming pools, thermal snow melting
systems in their streets during winter etc. because of this prized resource.
Special attention was given to the economic benefits accrued from geothermal
utilisation and additional advantages from an environmental standpoint. The
program host visited Iceland last autumn and told stories about his visits to the
Blue Lagoon, Icelandic geothermal sites and power plants.

Baoding, which is in Hebei Province, is one of the few cities in China which
enjoy special support from the Chinese government to become carbon free
cities. Footage was shown from greenhouses and aquaculture plants that
give off produce which are difficult to achieve outside harvesting season. The
construction of a geothermal public heating utility in Xiong County, which is
part of Baoding Municipality, received special attention but about 85% of the
inhabitants in Xiong County enjoy geothermal heating. The geothermal utility in
Xiong County is operated by Shaanxi Green Energy, a joint venture company
between the Chinese oil giant Sinopec and the Icelandic geothermal company
Orka Energy, the parent company of Enex China.

News release from the Icelandic Embassy in Beijing

The program on CCTV with English subtitles

Among other things they discussed the use of Icelandic knowledge and technology in the utilisation of geothermal energy. This technology has already provided good results in distant heating projects in the Shaanxi and Hebei provinces in China. There is a strong will to support the cooperation between Orka Energy and Sinopec. This cooperation aims at building geothermal heating utilities in additional cities and provinces in China, thus reducing the use of coals for house heating.

The President of Iceland also mentioned the use of geothermal heat for drying of food, just like producers in Iceland have used this resource for drying cod heads and other fish products. This method, which enhances the utilisation and storage of food, could become an important contribution to increasing the food security of China and other countries.

Ólafur Ragnar Grímsson, President of Iceland with H.E. Wen Jiabao, Premier of China. Both are participating in the World Future Energy Summit in Abu Dhabi.

Press release from President’s office (in Icelandic)

Official translation (in English)

Pictures from the meeting

Once full capacity has been installed, Shaanxi will become the largest heating utility in the world supplying heat from geothermal resources.

The news on Bloomberg