Reuters: China risks $14 billion on coal-to-gas pilot

China is spending $14 billion on pilot projects to turn coal in remote parts of the country into natural gas, a risky bet that could help meet the country's surging demand for the cleaner fuel.

As China triples natural gas use to around 10 percent of total energy demand by the end of the decade, it needs to find fresh sources of supply if it wants to avoid costly imports from Australia, Indonesia, Qatar and Turkmenistan.

The first of four pilot coal-to-gas (CTG) projects should ship gas by the end of the year, ramping up to 15 billion cubic meters (bcm) a year by 2015, or around 7 percent of China's gas demand.

If achieved, this level of output would put CTG on par with China's booming coal-seam gas sector and ahead of nascent shale gas. It could also give Beijing an advantage in marathon talks with Russia to secure gas from the Siberian basin.