China Gas bags 8 city gas projects in Huoqiu County

The company also purchases LPG carrier Panva Gas to actively expand LPG business.

Leading PRC piped-gas operator China Gas Holdings Limited (“China Gas”) announced that it has recently secured the gas operation concession in the Huoqiu County in Anhui Province. This project is the eighth city natural gas project the Group has won since December last year in 3 months’ time.

The eight recently won city natural gas projects are situated in the Cangzhou Development Zone in Hebei Province, Xinfeng County in Jiangsu Province, Huazhou City in Guangdong Province, Maoji Development Zone in Anhui Province, Dapu County and Wuhua County in Meizhou City, Qingshan Industrial Area in Wuhan City and Huoqiu County in Anhui Province, increasing the Group’s total number of city gas concessions to 148, according to a China Gas report.

Mr Eric Leung, Joint Managing Director and President of China Gas, said, “The use of natural gas is expected to rapidly rise during the 12th Five-Year Plan period, creating a huge demand for natural gas in cities, thus boosting the number of our natural gas consumers and our sales volume. Looking ahead, China Gas will continue to provide clean energy for both the citizens and industry, contributing to building a greener China and maximising value to shareholders.”

Mr Leung added, “The recent management and board level changes have caused concern among investors about the ability of the Group to develop new business opportunities, as well as the willingness of local governments to award concessions to the Group. Securing these eight new concessions in the past three months clearly demonstrates that the business development capabilities of the Group have not been affected by these changes in any respect. The financial conditions of the Group remain sound, and our business operations are carrying on as usual under the new management. Our local partners remain confident in the ability of China Gas to build and operate their gas supply systems in a safe, professional and cost-effective manner.”

In addition, the Group’s LPG business recently marked a milestone. Following its signing of Equity Transfer Agreement with Panva Gas, at a consideration of HK$530,000,000, to acquire 100% equity interest of Panva Gas on 10 March 2011 to enter the LPG downstream distribution market, the Group also added a new LPG carrier ship named Zhongran Zhi Xing through its subsidiary, Shanghai Zhongyou Energy Holdings Co. Ltd. (“Shanghai Zhongyou Energy”), on 15 March 2011. The naming and ship christening ceremony was held in Lujiazhi, Zhoushan, Zhejiang Province with Mr Pang Ying Xue, Joint Managing Director and Executive President of China Gas cutting the ribbon.

Total investment of the Zhongran Zhi Xing is RMB105,000,000 which will be injected by Shanghai Zhongyou Energy. The carrier ship has a total capacity of 5,000 m3 and is the LPG carrier with the highest carrying capacity, highest speed, best functions and equipment in coastal inland waters within China.

Currently, there are only two LPG carriers in all of Mainland China with the same carrying capacity. The christening of Zhongran Zhi Xing boosts the strength of the fleet of Shanghai Zhongyou. It improves the transportation capacity of Shanghai Zhongyou by 130,000 to 140,000 tonnes a year, bringing its total transportation capacity to approximately 450,000 tonnes a year. The greater capacity helps reduce procurement cost and transportation cost of the carrier fleet. Compared with the existing carriers in the market carrying LPG from Northern China, the newly acquired LPG carrier will efficiently save LPG transportation cost by more than RMB150 per tonne.