China Tian Lun Gas Holdings announced that the company has entered into a co-operation agreement with Henan Tian Lun Gas Group Limited, in witch both parties will form a joint venture company for investing and operating a coke oven gas-produced liquefied natural gas (LNG) project in Luoyang city.

The registered capital of the JV company will be RMB50,000,000, of which RMB40,000,000 will be contributed by Henan Tian Lun in cash, representing 80% of the shareholding interest of the JV company, and RMB10,000,000 will be contributed by Luoyang Rongtuo in cash, representing 20% of the shareholding interest of the JV company.

Henan Tian Lun intends to finance the capital contribution to the JV company from its internal cashflow from operations and/or bank loans. The JV company will develop a coke oven gas-produced LNG project with daily production capacity of LNG of approximately 200,000 cubic metres. It is intended that Henan Tian Lun will underwrite the sale of the LNG produced by the JV company. The directors believe that the project will generate satisfactory return in the future. After the coke oven gas-produced LNG project is put into operation, a separate agreement will be entered into between Henan Tian Lun and the JV company in respect of the underwriting arrangement.

The project is the first coke oven gas-produced LNG project of the group, signifying the entry of the group into a new gas source arena and its strategic significance to the group. Upon the commencement of the project,the natural gas channels of the group would be expanded, the group’s gas supply of the gas stations in Henan would be effectively secured and the gas procuring cost of the group would be lowered to a certain extent.

Further, the remaining portion of the LNG to be distributed by the group other than those to be used by the group can be used for sale, which can increase the revenue of the group’s sales of gas.