SK E&S Buys 10% Stake of ENN Zhoushan Terminal
According to the official statement, SK E&S, the energy arm of Korea’s SK Group, inked to buy 10% stake of the operating company of ENN Zhoushan LNG Receiving Terminal (ENN Zhoushan) on April 24, 2020, 8 days after SK E&S reducing China Gas’s 10% stake on April 17.
After decades of shallow cooperation with China Gas, SK E&S determined to establish its own channel from upstream to downstream throughout China’s emerging natural gas market. From the midstream, SK E&S participated in ENN Zhoushan to secure its LNG import source, while SK E&S also cooperated with Beijing Gas Blue Sky Holdings (BGBS) to develop the downstream market in Zhejiang. On July 3, 2020, SK E&S took over 30% stakes of BGBS’s natural gas and LNG trading arms in Zhejiang and inked a 10-year SPA to supply LNG from ENN Zhoushan.
ENN Zhoushan, entering service from November 2018, is the largest non-NOC LNG terminal in China with 3 Mtpa nameplate receiving capacity and second phase's 2 Mtpa receiving capacity under construction which is expected to run by 2021. The terminal, located on Zhoushan Island, is connected with the mainland with the cross-sea bridge and provides over 10,000 metric tons of LNG truck loading capacity per day, while its regas capacity is designed up to 15 mcm/d, but the pipeline connection is still under construction. Based on that, from 2021, it is estimated SK E&S will secure at least over 500,000 metric tons of LNG supply from the terminal, and the spare terminal window priority in the rear of ENN itself as expected.
SK E&S also endeavors to establish the downstream LNG distribution in the LNG direct-supply and LNG filling station business in Zhejiang Province. Together with the new trading arm taken-over from BGBS and the cooperation with ENN Zhoushan, the connection between the upstream and downstream has been fulfilled, and SK E&S is expected to embrace a great development in East China’s LNG market as an independent upstream supplier and downstream distributor simultaneously, shored up by the pioneering natural gas midstream reform in Zhejiang Province under the background of China’s natural gas aggressive promotion.
