Xinjiang Guanghui plans toconstruct one liquefied natural gas tank with storage capacity of 30,000-50,000 cubic metres in Rudong, Jiangsu province of east China, within 2010, said a source with the company.
It will be the first try for domestic LNG producers to build tank farm in places other than where the plants are located due to high expense and limited peak-shaving period in a year. The move is to facilitate its expanding downstream business, said one industry player.
The company is now operating one 1.5-million-cubic-metre/day LNG plant in Xinjiang Uygur Autonomous Region, northwest Chin. It will launch one 1.5-million-cubic-metre/day coal-to-LNG plant in Naomaohu County in this October, and another 1.5-million-cubic-metre/day LNG project in Jimunai county in August of 2011. Additionally, Guanghui is aggressively seeking to acquire small LNG plants and investing in LNG related projects.
If to keep such expansion pace, the company will see its production capacity jump by 200% within these two years.
The aforesaid company source emphasized that the sales have to "go out" (of Xinjiang) after production capacity is dramatically increased. Subsidiary plants are located in Xinjiang, far away from major consuming centers like east and south China. Therefore, it's essential to build a storage tank as a transfer hub in the targeted market.
In China, LNG is used as a supplement to pipelined gas in areas with insufficient pipeline delivery capacity and lack of reserves. So, it's crucial to ensure stable supply during peak demand season in competing for customers.
Thanks to cost advantage and high truck transport capacity, Guanghui can deliver cargoes to clients 4,000 kilometres away from its production base, compared with 2,000 kilometres for most other producers in the country. However, the long distance makes the turnover low. Also, truck transport is easily affected by rain and snowfall during winter peak-shaving period.
An off-site storage tank farm can guarantee stable supply while dispense with construction of a production base and retain the advantage of rich resource and low cost in Xinjiang.
The ongoing and planned LNG projects is estimated to reach 14.85-million cubic metres daily, C1's survey showed. The tank farm will be an important step to beat its rivals.
Market players diverged over construction an off-site tank farm. Small producers are not interested in that because of high requirements in construction technique, investment and gas source. For large producers, it may become a trend though.
Henan Zhongyuan Green Energy Hi-Tech and Dazhou Huixin Energy Source both have plans for building tank farms in targeted markets, said market sources. Guanghui may also locate tank farms in Henan province, or even other areas of the central region.
Xinjiang Guanghui's LNG production capacity is 1.5-million cubic metres/day at present, the largest in China.
