China power firm GCL revives LNG ambition after solar spin-off

Dynasty Digital Holdings

01/04/2024 08:56

By Chen Aizhu
       SINGAPORE, April 1 (Reuters) - Privately-run Chinese
power company GCL Holdings is rebuilding a natural gas business
after offloading hundreds of solar installations to set up gas
import capacity and a trading operation, company executives told
Reuters.
    If successful, GCL would join so-called tier-two liquefied
natural gas (LNG) players in China such as city-gas companies
ENN and Beijing Gas Group that aim to ramp up imports of the
super-chilled fuel alongside state majors to meet growing demand
from the world's top energy user. 
    GCL's return to gas after several years comes as global spot
LNG prices  LNG-AS  have fallen to near three-year lows on
growing supply, and as demand is set to expand in China, which
reclaimed its title as the world's top LNG buyer last year.
    The group's Hong Kong-listed unit GCL New Energy Holdings
 0451.HK  last month hired Xiong Xin, former vice president of
ENN Natural Gas, as head of gas trading to lead a team based in
Beijing that will expand to about 20 by year-end, company
executives told Reuters.  
    Xiong, who began his LNG career at state major CNOOC, will
also head a new gas trading arm in Singapore that will have
about five staff in the coming months, said Xu Huilin, GCL New
Energy's executive president.
    Details of GCL's renewed push into the gas business have not
previously been reported. 
        Once China's largest privately-controlled solar power
producer, GCL entered the gas business about a decade ago and
had rights to explore for hydrocarbons in Ethiopia. By 2018 it
had plans to invest billions of dollars to build five LNG
receiving terminals along China's coast. 
    But deep debt at its solar power generating unit, hurt by
industry-wide overcapacity and Beijing's phase-out of subsidies,
hobbled its gas ambitions, Xu said. 
    China, the world's largest solar power operator and
manufacturer, faces a massive capacity overhang that has hit
global solar material and equipment prices and sparked
international dumping concerns. 
    GCL sold all 220 of its solar stations totalling 7.15
gigawatts, mostly to state utilities, raising around 23.5
billion yuan ($3.25 billion) by the end of 2023, a company media
official said.
    The group still provides management and maintenance for
solar farms and has a profitable silicon manufacturing business,
Xu said.
    "The spin-off of the heavy solar downstream assets has
enabled the group's strategic shift back to the gas business,"
said Xu, previously a vice president at state-run Sinochem Oil,
who joined GCL last June.
    
    LNG TERMINALS, GAS-FIRED PLANTS 
    That shift includes building two receiving terminals,
marketing and international trading of gas, as well as producing
and exporting gas from Ethiopia, Xu said.   
    GCL is building an import terminal, estimated to cost 5
billion yuan, in Rudong in Jiangsu province that can handle 3
million metric tons of LNG a year. The project, held 51% by GCL
and 49% by independent oil and gas firm Pacific Energy, is
slated for start-up in late 2025, said Xu and Xiong. 
    Pacific Energy did not immediately respond to a request for
comment on the project.
    A similar-sized terminal planned for Maoming in Guangdong
province in which GCL will likely own a 43% stake, is pending
state approval, they added.
    GCL has stakes in 10 gas-fired power plants in Guangdong and
Jiangsu, giving it over 2 billion cubic metres of gas demand for
its trading business. It also intends to sell gas to third-party
customers such as city-gas companies and ceramics makers, Xu
said. 
    GCL is considering resuming activity in Ethiopia's gas-rich
Ogaden region, where it halted investment around 2018 after
drilling 40 wells, company officials said. 
    One proposal is to build a 600,000 ton-per year liquefaction
facility there, the officials said, with an eye to marketing
fuel shipped in ISO tanks to South Asia or Europe. 
    "The idea is to develop the gas resource step by step,
potentially bringing in strategic partners in the future to make
it a sizeable LNG export project," Xu said.  
    
($1 = 7.2279 Chinese yuan renminbi)


 (Reporting by Chen Aizhu; Editing by Sonali Paul)
 ((aizhu.chen@thomsonreuters.com; Reuters Messaging:
aizhu.chen.reuters.com@reuters.net))