(Yicai Global) May 25 -- Guanghui Energy's shares surged over 5 percent today after the Chinese gas and coal supplier said that it will construct a demonstration facility to promote the use of greenhouse gases in crude oil extraction.

Guanghui Energy’s share price [SHA:600256] closed up 3.92 percent at CNY3.18 (USD0.50). Earlier in the day it had reached CNY3.23.

The project, to be located in the Xinjiang Uyghur Autonomous Region’s Naomaohu area, can not only help fellow coal and coal chemical businesses reduce their carbon dioxide emissions, it can also help boost their oil extraction efficiency by between 10 percent and 30 percent, the Urumchi-based firm said yesterday.

It will only cost around CNY500 million (USD78 million) to build a pilot plant that can capture one million tons of carbon dioxide a year since Guanghui Energy already has the necessary infrastructure, the firm said, without going into details on an exact timetable or size of the project.

The funds will come from Guanghui Energy’s own capital and also through green financing, it said. The carbon resources from the company’s ongoing projects in the Naomaohu area are sufficient to meet the raw material needs of a factory that captures 10 million tons of CO2 a year, it added, citing the results from an earlier survey.

Guanghui Energy is also well positioned to ensure optimal distribution of the product, it added.

Editor: Kim Taylor