China Gas, GAIL ‘close’ to agreement on building plants

China Gas, GAIL ‘close’ to agreement on building plants
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First Published: Wed, May 23 2007. 12 28 PM IST
Updated: Wed, May 23 2007. 12 28 PM IST
By Wang Ying, Bloomberg
Beijing: China Gas Holdings Ltd. said it is “close” to an agreement with GAIL India Ltd. to form a venture that will build compressed natural gas processing plants in China, where the government wants to increase use of the fuel.
The venture would use GAIL’s technology to construct units that process gas into an alternative fuel to gasoline for buses and taxis in an initial five to 10 cities, China Gas Chief Financial Officer Eric Leung said in Beijing on 23 May.
China Gas has 61 natural gas projects in the country and wants to gain from the government’s promotion of cleaner-burning fuels. China relies on coal and oil for 90 % of its energy needs and has set a target for gas to contribute 5.3% of supply by 2010 from about 3% now.
“GAIL has the technology, but they don’t own projects in cities in China,” Leung said. “We have 55 cities that we are supplying gas now in China. We will use this joint venture to start building the CNG processing plants.”
Burning CNG in China would cost half as much as using gasoline as fuel, Leung said.
The Hong Kong-based gas distributor signed a contract to set up a venture with Oman Oil Co. to ship gas supplies to China from the Middle East, Leung said yesterday. China Gas and Oman Oil will invest an initial $40 million in the 50-50 venture, he said.
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First Published: Wed, May 23 2007. 12 28 PM IST
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