29 May 2007 - 13:22
  • News Code: 105866

China Gas Holdings Ltd., operator of 61 natural gas projects on the mainland, will build a 1.2 billion yuan (US$157 million) liquefied natural gas plant in southwestern China to gain from increased demand for cleaner-burning fuels.

The plant in the southwestern city of Dazhou will have annual capacity of 500,000 metric tons, or about 700 million cubic meters of gas, the company said in an e-mailed statement. Its shares rose as much as 11 percent in Hong Kong on resuming trade today.

 

This is the second major gas project the company has announced in a week. China Gas said May 23 it had formed a venture with Oman Oil Co. to ship the fuel to China from the Middle East. The Hong Kong-based company wants to secure supplies as China pursues a target to use gas for 5.3 percent of total energy consumption by 2010 from about 3 percent now.

 

"This is a very positive move from China Gas as the nation"s gas industry will grow very fast in the next five years and beyond," Duncan Chan, an analyst with Everbright Securities Co., said from Hong Kong today. "More discoveries by state oil companies in the region will also help to boost the industry."

 

The project includes construction of facilities to remove polluting sulfur and carbon from gas, a liquefaction plant, storage space and the production of trucks to transport LNG. China Gas expects the project to generate annual revenue in excess of 2 billion yuan on completion in 24 months, it said in the statement late yesterday.

 

LNG is natural gas that has been chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 259 Fahrenheit), for transportation to destinations not connected by pipeline. On arrival, it"s turned back into gas for distribution to power plants, factories and households.

 

"Investing in LNG projects will help us to alleviate some of the pressure of gas shortages in downstream city gas projects and further enlarge our market share," the company said.

 

Gas for the venture will come from Xuanhan County in Sichuan, part of the province"s estimated reserves of 1.5 trillion cubic meters of the fuel, the second-largest among the country"s inland areas, the company said.

 

China Gas shares rose as much as 24 Hong Kong cents to HK$2.49 and stood at HK$2.38 at the market"s 12:30 p.m. midday break. They have gained 54 percent in Hong Kong this year, outpacing the 2.8 percent advance in the city"s benchmark Hang Seng Index.

 

PIN/CHINADAILY.COM.CN

News Code 105866

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