Gail to pick up 10% stake in China Gas Holdings

Partnership for creating urban gas networks in china

Gail India Ltd will acquire 10 per cent stake in China Gas Holdings Ltd. It will also form a 50:50 joint venture with the Chinese company for creating urban gas networks in China.

The company has signed a preliminary agreement to buy 10 per cent of China Gas Holdings. Gail will take up to 10 per cent of the Hong Kong-listed firm through a share subscription and has agreed not to sell the shares for two years.

China has already sold 10 per cent stake in China Gas to Korea Gas Corporation (Kogas), South Korea's dominant gas supplier, and City Gas Pte. Ltd, the gas distributor company of Singapore's state-owned investment company Temasek Holdings.

The joint venture will create urban gas networks and long-distance pipelines. The venture will also sell and distribute liquefied petroleum gas.

China Gas supplies gas to more than 200,000 households and 2,000 industrial and commercial users in China, where it has more than 50 natural gas projects.

The company was granted a 30-year licence last month to run its piped gas business in Nanjing city.

China wants to duplicate the Delhi CNG model for its cities before the Beijing Olympics, besides it also is trying to promote the use of cleaner burning gas and reduce its reliance on coal.

The world's second-largest oil consumer is also trying to raise natural gas usage to 8 per cent from the current 3 per cent of its energy mix by 2010.

Connecting nations

• China has already sold 10 per cent stake in China Gas to Korea Gas Corporation (Kogas) and City Gas Pte Ltd, Singapore's gas distributor company
• The joint venture with Gail also plans to sell and distribute liquefied petroleum gas
• China Gas supplies gas to more than 200,000 households and 2,000 industrial and commercial users in China
• China wants to duplicate the Delhi CNG model for its cities before the Beijing Olympics