The LNG shipment from the Vancouver port was arranged by Changfeng and it arrived at the Shanghai port on November 8, 2018, and has now cleared customs.

The LNG exported to the PRC was procured by Changfeng from a British Columbia-based energy provider, and Sanya Changfeng Offshore Natural Gas Distribution Co., Ltd. (“Sanya Changfeng”), a wholly owned subsidiary of Changfeng, is the importer into the PRC.

The LNG received in Shanghai will be sold to Hebei Riheng Clean Energy Ltd. (“Riheng Energy”), a controlled subsidiary of Changfeng, and will be transported to Hebei to support the LNG distribution services of Riheng Energy to areas where pipeline gas is not accessible.

Changfeng had obtained an export order from the Canadian National Energy Board for the LNG export and Sanya Changfeng had received all necessary permits for the LNG import in the PRC.

According to the recent energy reform policies of the PRC government, the PRC is shifting away from a coal-based economy and is increasingly relying on natural gas as the source of energy consumption.

In particular, Changfeng’s management has observed that, in the winter months due to higher demand for natural gas required for heating in the PRC, the available supply of natural gas may be lower and trucked LNG prices may increase.

Based on Wood Mackenzie Ltd.’s estimates, trucks carried approximately 19 million tons of LNG to customers last year, accounting for 12 percent of the PRC’s total LNG consumption.

Further, unlike the market price of pipeline gas, which is regulated by the PRC government, LNG prices are relatively deregulated and market-oriented. Accordingly, the Group has been seeking to broaden its supply base beyond that of the PRC, to sources such as Canada, in order to benefit from opportunities in respect of LNG supply.

As a Canadian listed energy company operating in the PRC, the Group recognizes the potential synergy of Sino-Canadian energy trading and natural gas supply, and has taken steps such as the aforementioned trial run LNG shipment to strategically position the Group to seize such opportunities.

Source: Company Press Release