China Gas, Vitol create JV to supply 5 mil mt/year LNG in five years


Highlights

JV to supply around 800,000 mt/year LNG to China Gas from 2023

JV will tap into international LNG long-term, short-term deals

China Gas also inks deal with Beijing Gas to build gas business

China Gas Holdings Ltd. has entered into a joint venture with commodity trader Vitol in Singapore that will supply not less than 800,000 mt/year of LNG to China Gas from 2023, with volumes increasing to 5 million mt/year in five years, the Chinese city gas distributor said in a statement Nov. 26.

Not registered?


Receive daily email alerts, subscriber notes & personalize your experience.


Register Now

The move underscores the wide range of partnerships being undertaken by Chinese second-tier gas companies to import LNG following the gradual liberalization of China’s natural gas market and LNG imports.

The partnership will give international LNG trader Vitol access to some of the fastest growing sectors in China’s gas market, and help China Gas develop its own trading capabilities in the long-term. Such partnerships were common in the oil market when independent oil refiners first came to the global marketplace for crude.

Hong Kong-listed China Gas Holdings said it signed the strategic cooperation agreement with Vitol on Nov. 25 and both the party will hold 50% shareholding each in the joint venture.

The LNG supplied by the joint venture will be expanded to not less than 1 million mt/year starting from 2024, and target more than 5 million mt/year by the fifth year, the announcement said.

The JV will integrate the resources of the two parties and and develop new customers for imported LNG in China, China Gas said, but noted that the company’s existing imported LNG business would not be included in the JV.

The JV will tap into international LNG supply through long-term, short-term or annual LNG sale and purchase agreements with price linkages to recognized indices for supplying to China, according to China Gas. The JV can also jointly develop LNG receiving terminals in China with China Gas based on market conditions.

“The purpose will be to jointly develop our gas business, through new LNG terminals, distribution and downstream consumption capacity,” said a source with China Gas.

On Nov. 24, China Gas said it had signed a framework agreement with government-owned city gas distributor Beijing Gas Group to leverage combined natural gas resources, LNG storage and transportation assets, and downstream market access in gas related projects outside Beijing.

The two parties would also explore cooperation in upstream gas supply and downstream sectors, China Gas said, noting that Beijing Gas would also provide LNG processing and pipeline gas services to China Gas from its Tianjin Nangang LNG terminal after ensuring gas supply to Beijing.

Beijing Gas is building a 5 million mt/year LNG terminal in Tianjin Nangang, northern China. The first phase of the project is scheduled to complete construction by end-2022.

China Gas is a privately held company that operates 1,500 subsidiaries, more than 650 pipeline gas projects, 600 natural gas refilling stations for vehicles and ships, 32 natural gas pipeline projects, LPG terminals and a gas pipeline network of more than 500,000 km, its website showed.



Source link

Scroll to Top