Natural gas power continues to strengthen

Business | Stella Zhai 22 May 2019

Towngas China (1083) saw a 17-percent, year-on-year increase in gas sales for the first quarter of this year.

That was in line with expectations, chairman Alfred Chan Wing-kin said, and he forecasts that the firm will be attracting more customers helped by solid demand in the mainland.

The natural gas provider, accounting for the greater part of mainland business for Hong Kong and China Gas Co (0003), reported selling 3.05 billion cubic meters of gas for the three months to March 31. And its customer count increased by 210,000 to 12.8 million.

Chan said the purchase price for liquefied natural gas had decreased to a moderate 5,000 yuan (HK$5,680) per ton since the start of this year.

That compared with over 10,000 yuan per ton last year and was due to a warmer climate and a slowdown of the coal-to-gas switching policy.

He also expects an oversupply of LNG in the Asian-Pacific for the next two or three years.

In March, Chinese government officials said an oil and gas pipeline network involving state-owned companies but with diversified investors was being shaped. Chan believes that operations would launch in the second half of this year, and Towngas China could opt not to purchase gas from the sector's three giants - China National Petroleum Corp (0857), Sinopec (0386) and China National Offshore Oil Corp (0883).

The government has yet to disclose how the pipeline company will be structured, chief executive Peter Wong Wai-yee said, but Towngas would like to participate.

Chan also said that the Sino-US trade war has had a limited impact on business as market demand for natural gas remains solid.

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