OREANDA-NEWS. ENGIE and Shaanxi Houde Tongxing (HD) sign an investment agreement in Yulin, Shaanxi Province, China, to establish a joint venture (of which ENGIE holds 35% shares), aiming to build one of the largest LNG industrial base in the North-West region of China and to develop LNG downstream activities.

Through this contract, both parties will jointly invest and construct a LNG industrial base in the Yujia Industrial Park, Yulin, Shaanxi Province, China. The natural gas will be provided by CNPC and Sinopec’s long-distance natural gas transport pipeline. The project construction is divided into 2 phases: Phase I, with a capacity of 0.25 million tons of LNG per year will start its commercial operation in July, 2017, while Phase II, with a capacity of 0.5 million tons of LNG per year will be in commercial operation in February, 2018. The total estimated investment for these two phases amounts around 1400 million RMB (around Euros 200 million). In addition, the Joint Venture will launch the study at the beginning of 2016 about the construction of a LNG storage center in Yulin aiming to realize the peak shaving by LNG.

ENGIE is the only industry partner of the project. ENGIE will bring its management experience, technological know-how and expertise of industrial partner and take a significant role in the construction and operation of the whole project.

This project will benefit to the development of the region, both at the stage of the construction and the operation of the industrial plants. In addition, its commercial operation will offer through LNG sales an environment-friendly and sustainable solution to end-users such as industrial parks and residents in the North-West region of China that are not covered with natural gas pipelines and the transportation sector (heavy trucks, service vehicles, public transport…), willing to switch to LNG as a cleaner fuel. This will help the energy transition of this region, in line with the “Shaanxi Province Natural Gas Strategy”. In the meantime, Yulin will expect to become the largest LNG peak shaving storage center and LNG spot trading delivery point for inland China.

Jean Marc GUYOT, the president and CEO of ENGIE China said: “This is ENGIE’s first LNG Industrial base in Asia, we put high expectations in it and we look forward to working closely with a key Chinese partner and a key Chinese province of the gas industry. The signing of this contract underscores ENGIE’s ambition to pursue its development in China, namely by being a key player of the Chinese gas midstream, leveraging on the Group’s LNG sources, experience of gas infrastructures and energy services, and engineering know-how, and seizing opportunities in the growing China LNG market. Our vision is to offer sustainable solutions to China’s urbanization and industry.”