NOVEMBER 2008

Synthesis Energy obtains approvals for expansion of Hai Hua gasification project

Synthesis Energy Systems, Inc. (SES) announced that its 95 percent-owned joint venture project with Shandong Hai Hua Coal & Chemical Company Ltd. (SHHCCC) obtained key government approvals for the expansion (Phase II) of its existing Hai Hua project in Zaozhuang City, Shandong Province, China.

The Phase II expansion will result in additional production capacity of approximately 17,000 standard cubic meters per hour (scm/hr) (a 15 MW equivalent) of high-grade syngas at this site. After completion of the expansion, the plant will have a design capacity of approximately 45,000 scm/hr (a 40 MW equivalent). The project approvals were issued by divisions of the State Environmental Protection Administration and the National Development and Reform Commission.

With a workforce of over 150 employees, the Hai Hua Plant is utilizing SES’ global, exclusively licensed U-GAS technology to convert local low-rank coal, with approximately 40 percent ash content, into high-grade syngas.

The additional capacity from the Phase II expansion is expected to support approximately 100,000 tons/year of methanol production as well as other gas demands in the Xuecheng Industrial Park. SES is currently negotiating agreements, including ownership in the methanol facility, with SHHCCC as well as other customers for the additional syngas capacity. SES expects to finalize project terms and begin work on the Phase II expansion later this year.