China Gas and Beijing Gas sign strategic cooperation framework agreement

China Gas Holdings Limited, a leading natural gas operator in China, and Beijing Gas Group Co., Ltd., a subsidiary of Beijing Enterprises Holdings Limited, have signed a strategic cooperation framework agreement. Under the agreement, they are to actively expand relevant natural gas projects beyond Beijing, explore cooperation in procurement of imported natural gas resources, construction and utilization of urban gas storage tanks and supply of natural gas to downstream companies. Furthermore, both parties have reached an understanding to cooperate in the LNG emergency reserve project (including a receiving terminal, storage tanks and outbound pipelines for LNG) being developed by Beijing Gas Group in Tianjin Nangang. They are to commence in-depth cooperation in various aspects, such as optimization of the window period for receiving terminals and sales of piped natural gas. 

Located in the heart of North China, Tianjin is a land and sea transportation hub connecting different regions within North China. There is strong demand for natural gas across North China, while gas supply shortage has been one of the factors restricting the development of the “coal-to-gas” replacement campaign in towns and limiting growth of industrial and commercial sectors in the northern regions such as Tianjin City, Hebei Province and Shanxi Province. According to the strategic cooperation framework agreement, China Gas is to capitalize on Beijing Gas Group’s advantages in LNG receiving terminals to complement the Group’s extensive distribution network in cities beyond Beijing. Both parties are to initiate in-depth cooperation in procurement of imported natural gas resources, construction and utilization of urban gas storage tanks, supply of natural gas to downstream companies as well as distribution, transportation and trading of LNG. Leveraging the flexible downstream distribution and allocation capacities of both parties, the cooperation would not only enhance the overall effectiveness of LNG receiving terminals, but would also allow the Group to extend its core natural gas business to the midstream and upstream markets with an asset-light model, while gradually forging a comprehensively integrated LNG industry chain. The LNG emergency reserve project in Tianjin Nangang would help China Gas to secure the mid- to long-term rights of use to LNG receiving terminals and enable the Group to sign overseas direct gas procurement contracts, thereby ensuring stable gas supply and reducing gas procurement costs, and ultimately facilitate the sustainable and rapid development of its natural gas business across North China.

Mr. Liu Ming Hui, Chairman, Managing Director and President of the Group, said, “The in-depth cooperation with Beijing Gas Group is of great significance to the development of the Group’s natural gas business. As a leading enterprise in the gas industry, China Gas is committed to growing its user base, increasing gas supply and enhancing quality of service. This strong alliance allows the Group to give full play to its advantages in resources to boost LNG import and bolster its capability to secure supply. China Gas will continue to explore new cooperation opportunities so as to lay a solid foundation for the Group’s long-term development. In addition, the Group will closely follow the country’s ‘Carbon Peak, Carbon Neutrality’ policy, and strive to develop clean energy businesses in areas such as photovoltaic energy, hydrogen energy, electric-vehicle charging facilities and zero-carbon communities, in order to deliver more social benefits while creating greater value for shareholders.” 

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