China’s ENN plans surge in LNG purchases, online trading platform to increase market share
ENN plans to increase its liquefied natural gas purchases by over 60 per cent this year and has launched an online trading platform to improve transparency and distribution of the fuel industry-wide.
ENN Energy, one of China’s largest piped natural gas distributors, aims to grow its sales of liquefied natural gas (LNG) this year by over 60 per cent and has established an online trading platform as part of its long-term strategy to make the market more efficient and expand its presence in the industry.
The Langfang, Hebei province-based firm is seeking to sell over 2 billion cubic metres (bcm) of LNG — a chilled and compressed form of gas transported by vessels or trucks to markets — in 2016, up at least 63 per cent from 1.23 bcm achieved last year, a figure that exceeded a company target of 1 bcm.
“We want to gain market share to boost our influence in the market,” vice chairman Cheung Yip-sang said in an interview. “We want to become the Alibaba of the LNG industry so that volume and sources of demand and supply become more transparent and they can be matched up easier.”
Alibaba Group is a Chinese e-commerce juggernaut that sold 3 trillion yuan of goods through its online shopping platforms ahead of the fiscal year ending March.
ENN, controlled by mainland tycoon Wang Yusuo, has set up an online gas trading platform to link up gas sellers and buyers to help solve a problem of insufficient information flow about supply and demand that has led to logistics costs being higher than necessary, Cheung said.
He conceded the move will lower gas prices and distribution costs for all participants and cut ENN’s own distribution margins. Still the strategy would help the company build its brand and market clout to generate profit in other non-gas businesses once its users find it “too difficult” to leave its online platform, Cheung said.
ENN currently has a 19 per cent share of mainland China’s 10 million-tonne-a-year LNG retail market and has built up sufficient transportation capacity to handle most distribution needs of the big three state-backed oil and gas giants, PetroChina, China Petrochemical Corp and China National Offshore Oil Corp.