ENN Group to sew up LNG im­port deals by the end of this year

China Daily (Canada) - - BUSINESS - By DUJUAN dujuan@chi­nadaily.com.cn

Pri­vate sec­tor ENN Group plans to con­trib­ute toChina’s en­ergy se­cu­rity by en­sur­ing im­port of up to 2 mil­lion met­ric tons of liq­ue­fied nat­u­ral gas per year.

Ma Shenyuan, vice-pres­i­dent of the group, told China Daily, “ENN will nail cer­tain LNG sup­ply agree­ments by the end of this year with an ex­pected ca­pac­ity of up to 2 mil­lion met­ric tons an­nu­ally as a start, and grad­u­ally in­crease the vol­ume ac­cord­ing to mar­ket con­di­tions.”

ENN is the first Chi­nese pri­vate com­pany au­tho­rized by the cen­tral gov­ern­ment to build and op­er­ate an LNG im­port fa­cil­ity.

Ma said ENN’s over­seas part­ners, in­clud­ing LNG sup­pli­ers from North Amer­ica, Aus­tralia and Asia, are keen to ex­port clean en­ergy to China. “Abun­dant sup­plies and lower in­ter­na­tional LNG prices have cre­ated a buy­ers’ mar­ket, which fa­vors our on­go­ing ne­go­ti­a­tions.”

The cen­tral gov­ern­ment al­lowed ENN to build an LNG re­ceiv­ing ter­mi­nal in Zhoushan, Zhe­jiang prov­ince, ear­lier this year. China’s 11 ex­ist­ing LNG re­ceiv­ing ter­mi­nals and an­other five un­der con­struc­tion be­long to the three ma­jor Sta­te­owned oil and gas en­ter­prises: Sinopec Group, PetroChina Co and CNOOC Ltd.

The LNG ter­mi­nal li­cense for ENN was seen as a big step to­ward the pri­vate sec­tor’s par­tic­i­pa­tion in the en­ergy industry.

“The Zhoushan project has huge sig­nif­i­cance to both the coun­try and the com­pany,” Ma said. “As a pri­vate dis­tri­bu­tion com­pany, we are closer to the down­stream mar­ket and more flex­i­ble on busi­ness mod­els. Hav­ing more play­ers in the en­ergy mar­ket is ben­e­fi­cial for the na­tion’s en­ergy se­cu­rity.”

Cur­rently, ENNbuys gas andLNG mainly from the na­tional oil com­pa­nies, in­clud­ing PetroChina, the coun­try’s big­gest nat­u­ral gas pro­ducer and im­porter, for dis­tri­bu­tion.

“We dis­trib­uted more than 10 bil­lion cu­bic me­ters of gas in 2014. The com­pany will con­tinue sup­ply co­op­er­a­tion with the big three oil and gas com­pa­nies, even af­ter the com­ple­tion of the Zhoushan LNG re­ceiv­ing ter­mi­nal,” Ma said.

ENN dis­trib­utes nat­u­ral gas in 142 ci­ties in China, serv­ing more than 65 mil­lion peo­ple. It owns 527 gas re­fu­el­ing sta­tions in 105 ci­ties, pro­vid­ing com­pressed nat­u­ral gas and LNG to ve­hi­cles.

Ma said the com­pany con­sid­ers use of LNG as a trans­porta­tion and bunker fuel as a grow­ing trend with huge po­ten­tial in the industry, even though the global crude oil price de­cline has made its sub­sti­tute — nat­u­ral gas — less at­trac­tive in this mar­ket.

Li Li,

re­search

and

strat­egy di­rec­tor at ICIS En­ergy, a Shang­haibased en­ergy in­for­ma­tion con­sul­tancy, said in­vestors need to re­view their pre­vi­ous in­vest­ment in the LNG busi­nesses be­cause the com­pet­i­tive­ness of nat­u­ral gas is de­creas­ing due to the fall in crude oil prices.

Ac­cord­ing to ICIS En­ergy data, China’s down­stream LNG con­sump­tion growth for the first half of this year was 19.2 per­cent yearon-year, much lower than the up­stream im­ports growth of around 50 per­cent dur­ing the same pe­riod.

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