Fortune Oil report that it has, through its 100 per cent subsidiary Fortune Oil PRC Holdings Limited, signed an agreement with Tianjin Gas to establish a joint venture that will be responsible for the supply of liquefied natural gas ("LNG") to the city of Tianjin, China's sixth most populous city (population over 12 million). The joint venture company will manage, on a non-exclusive basis, the procurement, import and supply of LNG to Tianjin Gas including securing reliable and competitive overseas LNG supply. Fortune Oil will hold 60 per cent and Tianjin Gas 40 per cent of the equity interest in the joint venture company.
Tianjin Gas is the largest natural gas supplier in Tianjin City responsible for gas supply and operations to 18 districts and counties in Tianjin City with over 95 per cent of the market, 2 million customers and 9,000 km of gas pipelines. Tianjin Gas is one of the main shareholders in the Tianjin LNG Import and Regasification terminal which is expected to start operations in 2013. The terminal will initially import 2.2 million tonnes (3 billion cubic metres) of LNG per annum into China using a floating storage and regasification unit ("FSRU") with the plan to expand the LNG import terminal in Tianjin to a capacity of 6 million tonnes per annum (8 billion cubic metres) per annum from 2015.