George Frangeskides, Exec-Chair at Alba Mineral Resources, discusses grades at the Clogau Gold Mine. Watch the full video here.

Less Ads, More Data, More Tools Register for FREE

Pin to quick picksRDSA.L Share News (RDSA)

  • There is currently no data for RDSA

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

RPT-PetroChina reviews multi-billion-dollar push to produce LNG used in transport -sources

Mon, 18th Aug 2014 09:17

(Repeats to add more subscribers; no changes to text)

By Chen Aizhu

BEIJING, Aug 18 (Reuters) - China's biggest energy firmPetroChina is reviewing itsmulti-billion-dollar push to produce liquefied natural gas (LNG)to fuel trucks and ships in place of diesel, shutting twoloss-making gas liquefaction plants, sources said.

PetroChina unit Kunlun Energy Co Ltd closed thetwo major plants in the past month, wrongfooted by rising costsfor gas and China's slower growth rate that has cooled demand,two sources with direct knowledge of the situation said.

Seen just a year ago as a fast-growing profit engine, thefirm is now reviewing investment in the niche business thatchills gas into liquid form, sourcing the gas from smallproducing fields or from pipelines tapping large inland basins,they said.

LNG is increasingly being seen as a potential transportfuel, and can nearly treble a vehicle's driving range over rivalcompressed natural gas (CNG). Royal Dutch Shell lastyear agreed to run LNG fuelling lanes at up to 100 major truckstops along U.S. interstate highways.

LNG is cleaner and nearly a third cheaper than diesel,China's main transport fuel. Oil firms had an ambitious goalback in 2011 to replace 10 percent of automotive dieselconsumption with gas by 2015, industry officials have said.

Led by the private sector, China has built dozens ofsmall-scale onshore gas liquefaction facilities since 2001 totap marginal gas fields located off the national pipeline grid,filling a supply gap as demand for lower-carbon producing LNGsurged.

Kunlun, a relative latecomer, emerged as a leader of thebusiness, having spent billions of dollars on a dozen LNGplants, mainly in the country's west and north, and buildingover 600 gas refuelling stations. The company separatelyoperates two multi-billion-dollar LNG import terminals onChina's east coast.

It also helped put nearly 80,000 LNG vehicles on the road bythe end of 2013 by working with auto makers and truck fleetowners, said a Kunlun executive, who declined to be named as hewas not authorised to talk to the media.

But since the second half of 2013, Kunlun has seenutilization rates at some of its plants fall below 50 percent,he said, amid a broad economic slowdown and as Beijing rolledout a gas price reform that pushed up prices of feed gas.

An anti-corruption probe of top PetroChina executives,including Kunlun's former chairman Li Hualin - a protege ofChina's ex-security chief Zhou Yongkang who is now officiallyunder investigation - added to uncertainty about the company'sbusiness strategy, said the Kunlun executive.

A PetroChina spokesman did not respond to Reuters questions.Kunlun Energy's investor relation chief was not available forcomment.

PLANT SHUTDOWNS

In July, barely a month after the start of trial production,Kunlun shut down a 1.2 million tonne per year (tpy) liquefactionplant at Huanggang in the central province of Hubei, the sourcessaid.

The plant, the largest of its kind in China, had aimed tosupply LNG to vessels along the Yangtze, China's longest river.

A second plant at Ansai in northern Shaanxi province wasclosed a month ago. Neither plant has a clear date for arestart, the sources said.

Kunlun is now test-running a new 600,000-tpy facility inTai'an, in the eastern province of Shandong, following someearly technical glitches.

"For the (Tai'an) plant, the day it starts running is theday it begins incurring a loss," said an official at PetroChinaparent China National Petroleum Corp (CNPC), who was involved inbuilding all the three projects, which had a combined cost ofabout $1.3 billion.

Beijing introduced a new pricing scheme in July 2013 aimedat converging its domestic natural gas prices with the cost ofimported gas by end-2015, to encourage domestic production andmore imports by ship and pipeline.

Wholesale gas prices were raised by 15 percent last July,and the government earlier this week announced a fresh hike ofabout 18 percent to take effect from September.

The changes have pushed up the price of the gas feedstockfor LNG, but the slower economy has meant producers have beenunable to pass on the increased costs to consumers.

"It's a combination effect of price reform and the slowingeconomy. The sales prices for LNG couldn't catch up with thoseof feed gas," said Diao Zhouwei, Beijing-based gas marketanalyst at research firm IHS Energy.

Kunlun's plants that started after mid-2013 are paying theso-called "incremental" gas prices that are linked to the costof imported fuels, although some smaller LNG facilities arestill paying lower "existing volume" prices, due to agreementswith local governments, the sources said.

A slowdown in construction, coal mining and transportationsectors is also taking away the incentive for trucks to switchto gas as it involves an upfront additional cost that normallytakes some eight months to pay back.

The CNPC official said PetroChina has temporarily put a banon expanding its onshore LNG business while it studies theeconomics of its existing plants. (Additional reporting by Beijing news room; Editing by RichardPullin)

More News
27 Oct 2022 07:30

Shell announces $4bn share buyback as Q3 profits beat expectations

(Sharecast News) - Oil giant Shell announced a $4bn share buyback on Thursday as it posted better-than-expected third-quarter profits.

Read more
21 Apr 2022 11:53

Shell turning to China to offload Russian business - report

(Sharecast News) - Shell is reportedly looking to China as it looks to offload its Russian business.

Read more
15 Feb 2022 15:54

Shell preparing to sell North Sea gas fields - report

(Sharecast News) - Shell is reportedly preparing to launch the sale of its stakes in two clusters of gas fields in the southern British North Sea, part of an ongoing retreat of long-time producers from the ageing basin.

Read more
7 Feb 2022 10:52

Berenberg nudges up target price on Shell

(Sharecast News) - Analysts at Berenberg slightly raised their target price on oil and gas giant Shell from 2,350.0p to 2,375.0p on Monday, stating the firm was "on a roll".

Read more
31 Jan 2022 10:53

TOP NEWS SUMMARY: Shell and BHP share unifications go into effect

TOP NEWS SUMMARY: Shell and BHP share unifications go into effect

Read more
31 Jan 2022 07:48

LONDON MARKET PRE-OPEN: WeBuyAnyCar owner buys into Lookers

LONDON MARKET PRE-OPEN: WeBuyAnyCar owner buys into Lookers

Read more
28 Jan 2022 11:25

Shell's renewables boss steps down after less than two years

* Elisabeth Brinton leaves for new role, she says* Shell creates two new renewables leadership roles* Thomas Brostrøm to head renewables generation* Steve Hill to head energy marketingBy Ron BoussoLONDON, Jan 28 (Reuters) - Shell's head of renewable...

Read more
27 Jan 2022 16:14

UK earnings, trading statements calendar - next 7 days

UK earnings, trading statements calendar - next 7 days

Read more
26 Jan 2022 17:02

LONDON MARKET CLOSE: FTSE 100 soars ahead of Fed as oil, travel gain

LONDON MARKET CLOSE: FTSE 100 soars ahead of Fed as oil, travel gain

Read more
26 Jan 2022 14:36

China's Sinopec awards fewer cargoes in recent LNG tender

By Chen Aizhu and Marwa RashadSINGAPORE/LONDON, Jan 26 (Reuters) - Unipec, the oil and gas trading arm of China's Sinopec Corp has awarded fewer-than-planned cargoes in a recent tender to sell up to 45 cargoes of liquefied natural gas for 2022 del...

Read more
26 Jan 2022 12:16

LONDON MARKET MIDDAY: Markets brace for aggressive US Fed tightening

LONDON MARKET MIDDAY: Markets brace for aggressive US Fed tightening

Read more
26 Jan 2022 09:33

UPDATE 2-Commodity, bank stocks lead FTSE 100 higher; Playtech drops

* Oil and banking shares top gainers* Wizz Air reports Q3 loss, expects improvement in spring* FTSE 100 up 1.3%, FTSE 250 add 1.1% (Updates to market close)By Shashank Nayar and Ambar WarrickJan 26 (Reuters) - London's FTSE 100 rose on Wednesday wit...

Read more
26 Jan 2022 09:12

LONDON MARKET OPEN: Fresnillo drops on 2022 production warning

LONDON MARKET OPEN: Fresnillo drops on 2022 production warning

Read more
25 Jan 2022 21:13

UPDATE 1-U.S. awards 13 mln barrel exchange of crude from strategic reserve

(Adds details on sale, background on 50 million barrel SPR plan)WASHINGTON, Jan 25 (Reuters) - The U.S. Department of Energy said on Tuesday it had approved an exchange of 13.4 million barrels of crude oil from the Strategic Petroleum Reserve to ...

Read more
25 Jan 2022 20:10

U.S. awards exchange of 13 mln barrels of crude from strategic reserve

WASHINGTON, Jan 25 (Reuters) - The U.S. Department of Energy said on Tuesday it had approved an exchange of 13.4 million barrels of crude oil from the Strategic Petroleum Reserve to seven companies.The companies are Shell Trading US, 4.2 million ...

Read more

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.