China's GCL, Shell sign preliminary deal on LNG trading joint venture

The proposed JV would secure LNG supplies from Shell

  
Image used for illustrative purpose. A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan, ON November 13, 2017.

Image used for illustrative purpose. A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan, ON November 13, 2017.

REUTERS/Issei Kato

SINGAPORE - GCL Oil & Natural Gas Co Ltd has entered a framework agreement with Royal Dutch Shell to explore setting up a joint venture based in eastern China to market and trade liquefied natural gas (LNG), the privately owned Chinese company said on Tuesday.

The proposed JV would secure LNG supplies from Shell and market the fuel to a receiving terminal which GCL is planning in Jiangsu province, GCL said in a statement.

A Shell spokeswoman confirmed the agreement.

The companies provided no further details.

GCL, a subsidiary of private energy and power firm GCL (Group) Holding, is one of over a dozen Chinese gas terminal developers outside state giants China National Offshore Oil Company, PetroChina and Sinopec Corp that have so far dominated the LNG sector. China is the world's No.2 LNG importer.

GCL is planning three receiving terminals along China's east coast - Yantai in Shandong province, Rudong in Jiangsu and Maoming in Guangdong - with a total annual handling capacity of 14.5 million tonnes, Huang Shaohua, a strategic planning official with the firm, told Reuters.

Among them, the 5 million tonne-per-year Yantai project was first to have won state regulatory approval, in January, and GCL aims to start constructing the facility this year, Huang added.

The Yantai terminal, at an estimated cost of $1.1 billion, would start up in 2023, Reuters reported in March.

GCL submitted an investment plan for the 6.5 million tonne-per-year Rudong terminal to the state authority last December, Huang added.

The firm is in discussions with state oil and gas major PetroChina for possible joint investment in the third terminal, the 3 million tonne-per-year facility in Maoming, he said.

(Reporting by Chen Aizhu; editing by Jason Neely and Raju Gopalakrishnan) ((aizhu.chen@thomsonreuters.com; +65 6870 3284; Reuters Messaging: aizhu.chen.reuters.com@reuters.net))

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