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Chinese company buys stake in Santos

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World Coal,

Chinese gas distribution group, ENN Group, is to buy an 11.7% stake in Australian gas company, Santos, from Hony Capital for US$750 million. The acquisition marks the company’s first exposure to the upstream gas sector.

“The proposed acquisition is an exciting more for ENN,” said the company’s Chairman, Wang Yusuo. “This introduction to the upstream sector takes us a step forward in our aim to generate value across the entire natural gas value chain and allows up to learn and build experience.”

Over the last 15 yr, ENN Group’s natural gas sales volumes have grown by a CAGR of 47%, establishing the company as the largest private natural gas company in China. It supplies natural gas to more than 12 million households in 152 cities across China, as well as 56 000 industrial and commercial users.

The company also operates a network of 576 LNG and compresses natural gas refueling stations, distribution 1.88 million t of LNG annually – 20% of the LNG trade volume in China. It is building China’s first private LNG receiving terminal in Zhoushan, Zhejian Province, to receive imported gas.

As part of the deal, Hony Capital will become ENN’s A-share listed company through a private placement of new shares, equivalent to US$380 million.

Santos welcome the deal and the knowledge of China’s gas industry that ENN Group would bring. The Australian company is one of the most experienced coalbed methane (CBM: called coal seam gas in Australia) operators the country with operations in the Surat and Bowin Basins of Queensland.

Santos is also a partner with Malaysia’s PETRONAS and France’s Total in the Santos GLNG project, which feeds CBM to a two-train LNG plant on Curtis Island, Queensland, via a 420 km pipeline. First LNG production occurred in September 2015 with its first shipment reaching South Korea in October.

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