China Gas in LNG, LPG, hydrogen pact with Sinopec

Chinese piped-gas operator China Gas has formed an LNG and LPG and hydrogen pact with its compatriot China Petrochemical Corporation (Sinopec).

The strategic cooperation agreement will enable both parties to engage in all-round cooperation in areas including natural gas procurement, liquefied natural gas (LNG) receiving terminal utilisation, downstream gas projects, oil and gas (natural gas and hydrogen) stations/recharging poles and liquefied petroleum gas (LPG) business.

Under the agreement, China Gas will commence strategic cooperation with Sinopec in three main areas.

In the natural gas business, both parties will study and cooperate in the establishment of a natural gas trading company.

This trading company will be responsible for centralised procurement from Sinopec’s natural gas resources pool based on the China Gas’ needs.

The parties will also cooperate in the establishment of a joint venture company that is tentatively controlled by China Gas. This joint venture company will be responsible for the merger and acquisition of downstream gas companies, as well as acquisition of downstream gas project concession rights.

As for LNG business, Sinopec will support China Gas to invest in their
newly-established LNG receiving terminal projects, and it will enjoy the
window period rights for receiving and unloading LNG import resources
according to their respective shareholding, enabling China Gas to realise its strategic LNG import plan as soon as possible.

Also, by leveraging the group’s logistics advantages in regional city gas projects, coastal LNG imported trade and onshore LNG logistics capacity, as well as giving play to the layout of Sinopec’s petroleum/gas stations, both parties will cooperate in developing gas/recharging pole joint stations, LNG distribution warehouse and relevant logistics system, as well as jointly develop initiatives in the transportation energy business.

With regards to LPG business, the group being the largest vertically integrated LPG business service provider, will deepen its cooperation with Sinopec in the fields of LPG trading and logistics, including jointly
facilitating the establishment of the national association of LPG importers, coordinating external procurement, and promote the formulation and application of China’s LPG import price index.

The parties will also conduct a joint study on the feasibility of investing in the construction of public liquefied hydrocarbon storage facilities in coastal and riverine areas, as well as explore the feasibility of commencing cooperation in the supply of liquefied hydrocarbon resources.

China Gas will also allow Sinopec to rent and use its LPG terminals and storage facilities in order to provide support to Sinopec’s onshore LPG resources operation.