GTE Global brings LNG to China

China

TOGY talks to David Pang, Chief Executive Officer of GTE Global, about the milestones in the company's development, its activities in China and in Southeast Asia, and its international expansion strategy.

GTE Global is a Tianjin-headquartered company that engages in research, development and manufacturing of CNG, LNG and L-CNG equipment as well as natural gas energy equipment and other related systems. In June 2016, GTE Global was awarded a contract for equipment supply and installation services for the L-CNG station in Fenghua by Zhejiang Communications Investment Group. The designed gas cargo capacity for the transit station is 20,000 cubic metres (706,214 cubic feet) per day.

• On bringing LNG to China: I led a project to build the first mini LNG liquefaction plant in China. It produced only 100 tonnes per day. No one thought it would be viable economically at such a small scale, no one but us. China gradually built up its technology, capabilities, and equipment. Now, there are more than 200 small liquefaction plants in China. These facilities produce from 150,000 cubic metres (5.3 mcf) to 1 mcm (35.3 mcf) per day.

• On supplying LNG: Many people are interested in LNG but few know how to manage the whole supply chain. There are many steps involved when it comes to LNG infrastructure: procurement, support, storage, sales and distribution. Operators in Indonesia generally focus on only one of these steps, while they should all be integrated in an economical and efficient manner.

• On market development: There are probably about 4.4 million NGV vehicles and about 180,000 heavy trucks running on LNG in the Chinese market right now. Unfortunately the government’s tight control on gas and diesel prices prevents the price difference growing enough to become an incentive and limits the development of the market. That is a big problem right now.

Besides touching on these topics TOGY talked at length with David Pang about the company’s potential for market growth, global expansion, and impediments to the success of LNG in China. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with David Pang below.

Can you discuss GTE Global’s involvement with the Chinese hydrocarbons market?
I founded GTE Global at the end of 2009. Before that I worked for ENN and for an American company in Houston called Neo Gas. This company closed because of the financial crisis, which is why I started my own company.
GTE Global operates in the downstream sector [of China’s hydrocarbons industry]. We began with CNG, providing refilling stations, new technology, storage, distribution, and dispensing services. We offered refuelling for natural gas vehicles (NGVs), as well as CNG transportation and pressure reduction systems for industrial and commercial users.
Back then LNG was not available and the only way to transport natural gas was to truck it. Unfortunately the cost of transportation was very high and the traveling distance was limited to 150 kilometres. Of course pipelines represent another possible mode of transportation, but building them takes a lot of time, money, and engineering skills. China is a huge country. It is hard to connect every city.
Back in 2004, I led a project to build the first mini LNG liquefaction plant in China. It produced only 100 tonnes per day. No one thought it would be viable economically at such a small scale, no one but us. China gradually built up its technology, capabilities, and equipment. Now, there are more than 200 small liquefaction plants in China. These facilities produce from 150,000 cubic metres (5.3 mcf) to 1 mcm (35.3 mcf) per day.
Since then, LNG has become available on land and we have started operating in the LNG business. I really like LNG because of its efficiency. Many of the LNG terminals currently in operation are located around the coastal areas. So, on-land and offshore make the LNG available in China.
I think China is a large, unique market that impossible to compete with. China is the world’s leader in terms of LNG applications and technology right now. I am proud of having been a pioneer in the realm. Of course, we provided the technology and the equipment.

How are these mini LNG plants particularly suitable for smaller islands in Southeast Asian countries?
This is the only option in Indonesia. There are so many islands, you can not build pipelines between all of them. The same could be said of Malaysia, however the country is politically and economically difficult to enter, as it is controlled by a monopoly.
Many people are interested in LNG but few know how to manage the whole supply chain. There are many steps involved when it comes to LNG infrastructure: procurement, support, storage, sales and distribution. Operators in Indonesia generally focus on only one of these steps, while they should all be integrated in an economical and efficient manner.

Do you see any development coming in the mini LNG area in the near term?
The technology for mini or large scale LNG has been around for a while. There is nothing new in my opinion. The question is, who is going to implement it, and how?
The technology used to be controlled by a few international companies. It has been difficult to bring the cost down, but otherwise how could you spread the technology? How could you develop the downstream market? The Chinese people are brave and they were willing to try everything possible to make this happen.
We broke a monopoly, and that made a huge difference. That made the price more affordable and the market more competitive. Now, many companies in China can set up their own facilities using Chinese-made products and equipment. This has allowed the market to experience phenomenal growth over the last 5-10 years. There are now more than 200 liquefaction plants in China.

Which growth areas have you identified?
For my company, the growth areas depend a lot on the local government’s policy. Right now, as the government is trying to reduce pollution by switching from coal to gas, we re-gas and supply natural gas to industrial, commercial and individual users. Re-gasification is a big market for us, so are NGVs.
There are probably about 4.4 million NGV vehicles and about 180,000 heavy trucks running on LNG in the Chinese market right now. Unfortunately the government’s tight control on gas and diesel prices prevents the price difference growing enough to become an incentive and limits the development of the market. That is a big problem right now.
I personally think that this will change sooner or later, when the prices allow it. There is great potential for the market to grow in the future. Just consider heavy trucks. LNG is the ideal type of fuel for them. They can use LNG as well as diesel, and one full tank of LNG will fuel a truck for more than 1,000 kilometres, more than the diesel equivalent, and in a cleaner way. Diesel is diesel, there will always be carbon emissions. LNG is economical, easy to use, and environmentally friendly. I think China is also the world leader in this market.

Can you please elaborate on your LNG projects in Indonesia?
In Southeast Asia, I am only concentrating on LNG because there is no market for CNG. CNG is not an economical fuel, it only powers a vehicle for 100 kilometres. This is a big limitation. Diesel for vehicles in these countries has some kind of government subsidiary.
Over there, the retail price difference between LNG and diesel is much bigger and represents an incentive. So this is a good market for LNG-powered trucks and also for natural gas transportation. LNG is convenient for this kind of small island. As you can see there are not many gas pipelines around. We design, source and manufacture ourselves all the natural gas equipment we use in Southeast Asia.

Let’s talk about your international growth plans. Do you have any other target markets to expand into at the moment?
The Chinese market remains very large. Yet it is slowing down, becoming less vibrant, so I am switching focus and turning to the Southeast Asian market. Once this market is secured, we can consider expanding into Iran and the Middle East. We need to find a good local partner before starting to conduct business operations there, though. I went to Southeast Asia because I know the people and the market. Every year I attend conferences and hold workshops there.

For more information on China’s LNG market see our business intelligence platform, TOGYiN.
TOGYiN features profiles on companies and institutions active in China’s oil and gas industry, and provides access to all our coverage and content, including our interviews with key players and industry leaders.
TOGY’s teams enjoy unparalleled boardroom access in 32 markets worldwide. TOGYiN members benefit from full access to that network, where they can directly connect with thousands of their peers.

Business intelligence and networking for executives: TOGYiN

Read our latest insights on:

• Indonesia
• Malaysia