Hong Kong-based natural gas operator and distributor China Gas said it plans to form a joint venture with a unit of energy trader Vitol in order to supply LNG to China.
The firm and Vitol Asia entered into a strategic cooperation deal on November 25 to, among others, jointly expand the LNG trading market in China, China Gas said in a statement.
According to China Gas, the partners intend to form the 50/50 joint venture in Singapore.
The JV would integrate the resources of the two firms in order to develop new customers of imported LNG in China, the statement said.
This excludes the existing LNG import business of China Gas, it said.
LNG supplies could grow to 5 million tonnes per year
The JV would supply China Gas with no less than 800,000 tonnes of LNG per year from 2023.
From 2024 onwards, the supply would grow to 1 million tonnes per annum. China Gas said the JV targets to supply 5 million tonnes per annum by the fifth year of its establishment.
The JV would actively seek competitive international LNG resources to supply the
Chinese market, including but not limited to, long-term, short-term and annual LNG purchase and sale contracts linked to relevant recognized indices, it said.
Besides the supply, the JV may also develop LNG receiving terminals in China, depending on market conditions, China Gas said.
Vitol, which entered the LNG market in 2006, said earlier this year it had traded 10 million tonnes of LNG in 2020. It previously entered into mid- and long-term contracts with major oil and gas firms around the world.
Leveraging China Gas’ strong distribution capability and influence in the LNG market of China and Vitol’s extensive resources and experience in international LNG trading, the JV would be “conducive to the development and expansion of the incremental business of LNG imports in China,” China Gas said.
Beijing Gas deal
China Gas has also this week revealed a strategic cooperation deal with Beijing Gas, the developer of the Tianjin Nangang import terminal.
Under this deal, the duo would work on natural gas resources, LNG storage and transportation and natural gas downstream market, China Gas said.
Beijing Gas would also provide LNG processing and pipeline gas services from the Nangang terminal to China Gas, it said.