Synthesis Energy Systems Inc, a Houston-based company focusing on advanced energy gasification technology, announced on Tuesday that it and China Environment State Investment Company (CESI) have signed their first joint project investment and cooperation agreement with a development zone in East China.

The SES-CESI platform projects will use SES Gasification Technology's (SGT) clean syngas to produce lower-cost hydrogen needed for clean fuels production by refineries at the Lijin County Binhai New District Industrial Park in Dongying, Shandong province.

Early this year, SES and CESI signed an agreement to jointly develop, invest and build no fewer than 20 projects using SES Gasification Technology (SGT) over the next five years.

Demand for industrial hydrogen is increasing in China due to high purity hydrogen being a significant required ingredient to upgrade transportation fuels to meet China's National V Standards.

The current source of hydrogen for China's refineries is primarily through an expensive methanol-cracking process or reforming of expensive natural gas. Utilizing SGT syngas to produce hydrogen provides better economic advantages.

The Lijin build-out consists of three projects with an estimated total investment of $307 million by SES-CESI. The first project, estimated to cost about $107 million, is expected to deliver 40,000 normal cubic meters per hour of 99.9 percent high purity hydrogen, as well as fuel gas, to the local refineries in the park.

The project is currently owned 51 percent by CESI and 49 percent by SES, and the parties may offer equity positions to the major hydrogen customers of the project.

"We have placed significant effort into bringing this opportunity forward and are very pleased to have reached this milestone for our first project of the new SES-CESI platform," said DeLome Fair, SES president and CEO.

"In parallel, with CESI, we are continuing our work to bring in additional projects to the platform that vary in size and range between $75 million to over $400 million each in estimated installed costs."