China Gas-Vitol JV aims to supply China 5 mln T LNG by 2027 - executive

China Gas Holdings

03/12/2021 02:15

By Chen Aizhu and Julia Payne
    SINGAPORE/LONDON, Dec 3 (Reuters) - Privately controlled gas
distributor China Gas Holdings  0384.HK  aims to supply five
million tonnes of liquefied natural gas from 2027 into China via
a new trading venture with commodities trader Vitol, a company
executive told Reuters. 
    Independent Chinese gas firms are set to make waves in the
global market with plans to invest tens of billions of dollars
in receiving facilities and double imports of the superchilled
fuel in the next decade. urn:newsml:reuters.com:*:nL4N2HB1MR 
    China Gas and Vitol announced last week a 50-50 joint
venture in Singapore to trade LNG, the second of its type that
pairs a western commodities trader with a local gas distributor,
following the tie-up between Glencore and Zhejiang Energy Group
in 2018.  urn:newsml:reuters.com:*:nL4N2H7166
    China, which this year overtook Japan as the world's largest
LNG buyer, sees natural gas as a key bridge fuel to replace coal
 along its journey to reach carbon neutrality by 2060. 
    The announcement came a day after China Gas, one of the
country's largest independent piped-gas distributors, entered a 
framework agreement with Beijing Gas Group in LNG procurement
and distribution.  urn:newsml:reuters.com:*:nFWN2SF0QP 
    Backed by the municipal government of the Chinese capital
city, state-run Beijing Gas Group is building an LNG receiving
terminal with annual capacity of 5 million tonnes in the
northern port city of Tianjin, near Beijing, that is scheduled
for completion around end-2022.
    "We're still finalizing the details of the JV, but the idea
is for the venture to supply China through the Tianjin
terminal," said Frank Li, a vice president of China Gas.
    Vitol, one of the world's top LNG traders that moved 10
million tonnes of the fuel last year, brings its deep global
trading expertise, Li added. 
    Just a few years ago, China Gas was mulling an investment in
a receiving terminal along China's coast, but dropped the idea
to focus on expanding trading that would allow the firm to
leverage its vast domestic distribution network and "stay light
on fixed assets", said Li.  
    The venture, which Li expected to start running next year,
aims to supply a minimum 800,000 tonnes of LNG into China in
2023, rising to over a million tonnes the following year before
reaching 5 million tonnes in five years' time, he said.     
    China Gas sold 31.2 billion cubic meters, or about 23
million tonnes of natural gas in the financial year ended March
31, 23% higher than a year earlier, the firm said in its
investor brief last week. That was equivalent to roughly 10% of
China's total gas demand.
    That included 3.37 million tonnes of LNG, a volume more than
double the year-ago level as China Gas expanded its trading
using terminals run by energy infrastructure firm PipeChina.
    China Gas said it aimed to further raise the LNG turnover to
4.5-5 million tonnes in the new financial year of 2021/22.   

 (Editing by Gavin Maguire & Shri Navaratnam)
 ((aizhu.chen@thomsonreuters.com; Reuters Messaging:
aizhu.chen.reuters.com@reuters.net))