Privately-run Chinese power company GCL Holdings is rebuilding a natural gas business after offloading hundreds of solar installations to set up gas import capacity and a trading operation, company executives told Reuters.
If successful, GCL would join so-called tier-two liquefied
natural gas (LNG) players in China such as city-gas companies ENN and Beijing
Gas Group that aim to ramp up imports of the super-chilled fuel alongside state
majors to meet growing demand from the world's top energy user.
GCL's return to gas after several years comes as global spot
LNG prices have fallen to near three-year lows on growing supply, and as demand
is set to expand in China, which reclaimed its title as the world's top LNG
buyer last year.
The group's Hong Kong-listed unit GCL New Energy Holdings
last month hired Xiong Xin, former vice president of ENN Natural Gas, as head
of gas trading to lead a team based in Beijing that will expand to about 20 by
year-end, company executives told Reuters.
Xiong, who began his LNG career at state major CNOOC, will
also head a new gas trading arm in Singapore that will have about five staff in
the coming months, said Xu Huilin, GCL New Energy's executive president.
Details of GCL's renewed push into the gas business have not
previously been reported.
Once China's largest privately-controlled solar power
producer, GCL entered the gas business about a decade ago and had rights to
explore for hydrocarbons in Ethiopia. By 2018 it had plans to invest billions
of dollars to build five LNG receiving terminals along China's coast.
But deep debt at its solar power generating unit, hurt by
industry-wide overcapacity and Beijing's phase-out of subsidies, hobbled its
gas ambitions, Xu said.
China, the world's largest solar power operator and
manufacturer, faces a massive capacity overhang that has hit global solar
material and equipment prices and sparked international dumping concerns.
GCL sold all 220 of its solar stations totalling 7.15
gigawatts, mostly to state utilities, raising around 23.5 billion yuan ($3.25
billion) by the end of 2023, a company media official said.
The group still provides management and maintenance for
solar farms and has a profitable silicon manufacturing business, Xu said.
"The spin-off of the heavy solar downstream assets has
enabled the group's strategic shift back to the gas business," said Xu,
previously a vice president at state-run Sinochem Oil, who joined GCL last
June.
LNG TERMINALS, GAS-FIRED PLANTS
That shift includes building two receiving terminals,
marketing and international trading of gas, as well as producing and exporting
gas from Ethiopia, Xu said.
GCL is building an import terminal, estimated to cost 5
billion yuan, in Rudong in Jiangsu province that can handle 3 million metric
tons of LNG a year. The project, held 51% by GCL and 49% by independent oil and
gas firm Pacific Energy, is slated for start-up in late 2025, said Xu and
Xiong.
Pacific Energy did not immediately respond to a request for
comment on the project.
A similar-sized terminal planned for Maoming in Guangdong
province in which GCL will likely own a 43% stake, is pending state approval,
they added.
GCL has stakes in 10 gas-fired power plants in Guangdong and
Jiangsu, giving it over 2 billion cubic metres of gas demand for its trading
business. It also intends to sell gas to third-party customers such as city-gas
companies and ceramics makers, Xu said.
GCL is considering resuming activity in Ethiopia's gas-rich
Ogaden region, where it halted investment around 2018 after drilling 40 wells,
company officials said.
One proposal is to build a 600,000 ton-per year liquefaction
facility there, the officials said, with an eye to marketing fuel shipped in
ISO tanks to South Asia or Europe.
"The idea is to develop the gas resource step by step,
potentially bringing in strategic partners in the future to make it a sizeable
LNG export project," Xu said.