Shanghai. December 20. INTERFAX-CHINA - A methanol project with annual production capacity of 400,000 tons is ready to start production at Sichuan Lutianhua, a southwestern Chinese chemical maker, officials from the company told Interfax on Tuesday.

"The trial production of the project has been quite successful and we will soon launch official operations after solving a few minor technical problems," an official from Lutianhua surnamed Luo said.

According to Luo, the methanol project, with total investment of RMB 1.07 bln (USD 133.75 mln), will use natural gas from the gas-rich Sichuan? Basin as raw material. It is expected to generate annual sales revenue of RMB 800 mln (USD 100 mln) upon production.

China's annual demand for ethanol, which is widely used in the chemical, pharmaceutical and? fuel industries, now stands at around 5 mln tons a year and? is? expected to grow at over 8% per annum in the coming few years, the state statistics bureau says.

In 2004, China produced 4.4 mln tons of methanol domestically, representing a year-on-year growth of 35%. It produced 2.63 mln tons in the first half of this year.