May 6 (Bloomberg) -- China National Offshore Oil Corp., the country’s biggest offshore petroleum explorer, and Datong Coal Mine Group Co. plan to invest 30 billion yuan ($4.4 billion) in a plant that will turn coal into gas and electricity.

China National Offshore’s New Energy subsidiary, Datong Coal and the city government of Datong agreed on the joint project in the northern province of Shanxi at the end of last month, the parent of Hong Kong-listed Cnooc Ltd. said in a May 4 statement on its Web site.

The companies will build a plant able to produce 4 billion cubic meters of gas a year and three power-generating units with a capacity of 300 megawatts each, China National Offshore said. The global recession presents opportunities for changes in China’s industrial structure, it said.

The project is a “large-scale and strategic” cooperation between the nation’s oil and coal sectors, China National Offshore’s Vice President Zhou Shouwei said in the statement.

The Datong government aims to start construction “soon,” it said in a statement dated April 27. The partners target annual revenue of 26 billion yuan from the venture, which includes the development of two coal mines, after completion, it said. The government gave no timeframe for the project.

To contact the reporter on this story: Eugene Tang in Beijing at eugenetang@bloomberg.net

Last Updated: May 5, 2009 22:06 EDT