1. Investment in clean energy infrastructure
CGH (HKEX: 384), which Fortune Oil is a major shareholder, is one of China’s largest independent natural gas services operators, principally engaged in the investment, construction and management of city gas pipeline infrastructure, gas terminals, storage facilities and gas logistic systems，distribution of natural gas and LPG to residential, industrial and commercial users, construction and operation of CNG / LPG gas refuelling stations, and development and application of natural gas and LPG related technologies.
As at 31 March 2016, CGH supplies natural gas to 315 cities in 28 provinces, municipalities and autonomous regions, covering an urban population of over 100 million, and owns and operates 15 long-distance natural gas pipeline projects, 571 compressed/ liquefied natural gas refuelling stations for vehicles, 1 coal bed methane project, 98 LNG distribution projects and over 1,000 LPG distribution points. During the financial year (“FY”) 2015/2016, CGH sold approximately 10 billion cubic metres of natural gas and 3.1 million tonnes of LPG. CGH is also China’s largest LPG service operator and has also secured an important position in LNG’s imports and sales markets.
2. Logistic operation, supply and refuelling of aviation fuel infrastructure
Established in 1998, South China Bluesky Aviation Oil Company Limited ("Bluesky") is the largest State Council approved civil aviation joint venture between CNAF (51%), Fortune Oil (24.5%) and BP PLC (24.5%). It is responsible for the sourcing, storage, transportation, sales and refuelling services at 24 airports in 5 central and southern provinces, including the cities of Guangzhou, Nanning, Guilin, Changsha, Wuhan and Zhengzhou, serving over 100 national and international airlines. In 2015, Bluesky provided safe and reliable fuel supply for 574,800 aircraft and sold over 4 million tonnes of aviation fuel, which accounted for about 20% of China’s aviation refuelling market.
For 18 years since incorporation, Bluesky's strategic goal is to be one of the most progressive and innovative aviation fuel suppliers in the Asia Pacific region, achieving sustainability in markets, profits and culture. The company strives to offer excellent service for domestic and international airlines as well as a secure supply of China’s aviation fuel. Encouraging a corporate culture of a world-class business with a dedicated team, Bluesky is committed to enhance economic growth, social values and environmental awareness. Bluesky’s operating performance and continuous improvement have been fully recognised across the aviation industry as well as the general public.
China's civil aviation sector is currently at a stage of high growth. The prospects for Guangzhou Baiyun International Airport, one of China’s three most important international aviation hubs, is enormously promising. Baiyun Airport serves 118 international routes, 129 domestic routes, and operates 3 runways and 1 terminal. By 2025, it will have 5 runways and 3 terminals.
As the sole aviation fuel supplier of Guangzhou Baiyun Airport, Bluesky is well positioned for continued growth and innovation, in keeping with the exponential growth of China’s civil aviation market and providing even better service for its aviation customers. It will also enhance its economic performance, environmental standard and social responsibilities, and maximise returns for its shareholders.
3. Offshore crude oil terminal – Maoming SPM (Single Point Mooring)
Maoming SPM was Fortune Oil’s first energy project in China. In 1993, Fortune Oil and Sinopec Maoming (one of China’s largest refineries) established a joint venture Maoming King Ming Petroleum Company Ltd (“MKM”). In December 1994, Maoming single point mooring (“SPM”) came into operation. (The project has a single-point buoy system and related facilities, and also a 15-km, 34 inch diameter sub-sea pipeline.
After over 20 years of development and reinvestment, Maoming SPM is able to handle Very Large Crude Carriers (“VLCC”) of up to 300,000 tonnes. In calendar year 2015, it handled 12.2 million tonnes of crude oil (3.6% of China’s crude oil imports). Maoming SPM remains the only SPM system of its kind in China for handling crude oil.
Maoming SPM maintains a world-class track record of safe, environmental friendly and efficient operation. Functioning as the crude oil supply facility for Sinopec’s Maoming refinery, since commencing its operation, the SPM has handled 956 vessels and imported 184.3 million tonnes of crude oil as of the end of June 2016.
In 2013, Fortune Oil and Sinopec renewed its venture contract for another 20 years and formed Maoming New King Ming Petroleum Company Ltd (“NKM”), with Fortune Oil and Sinopec holding 33% and 67% respectively.
In line with government plans in the refinery and petrochemical industry, Sinopec began constructing the Maoming-Zhanjiang integrated petrochemical complex, whose capacity is expected to be double that of the present Sinopec Maoming refinery.
In July 2016, NKM started constructing the second sub-sea pipeline of approximately 15.5 km long and 48 inches in diameter. Once it is completed, the annual import capacity of the SPM will increase by over 50%.
4. Oil products and liquefied petrochemical products storage
The West Zhuhai Jetty and Storage Terminal is operated by South China United Petroleum Company (“West Zhuhai”), a joint venture between PetroChina Company Limited (45%), Fortune Oil (37%) and Poweroil Group Company Limited (18%). Established in March 1994, West Zhuhai’s business includes petroleum trading, storage, wholesale and retail, plus other terminal services.
West Zhuhai Jetty and Storage Terminal is located at Zhuhai Bay of Gaolan Island, within the Zhuhai Special Economic Zone. It covers an area of 147,600 square metres and entered operation in November 1998. After three phases of development, the terminal facility now has 22 tanks, with a total capacity of 457,000 cubic metres of oil products and liquefied petrochemical products.
The facility is among the largest of its kind in southern China and consists of 4 terminals: one 80,000-tonne terminal, one 10,000-tonne terminal and two 1,000-tonne terminals. The West Zhuhai Jetty and Storage Terminal handles 2.3 million tonnes of oil products annually.
West Zhuhai has a forward-looking and proactive staff. While adhering to PetroChina’s “Strategic Oil Products Reserve” strategy, West Zhuhai has also put its strengths into good use and actively developed a bonded business in recent years, laying a solid foundation for long-term, healthy and steady growth.
For 18 years, West Zhuhai has placed safety and customer satisfaction as its top priorities and provided quality service to its customers, principally PetroChina. Since the commencement of operation, West Zhuhai has handled 31.9 million tonnes of oil products and liquefied petrochemical products as the flagship storage for the PetroChina group, establishing strong credibility in the storage market and bringing considerable returns for its shareholders.
5. International trading
Fortune Oil has over 20 years of international trading and supply of oil and gas products in China. The trading business encompasses crude oil, oil products, mixed aromatics and LPG.
Fortune Oil has trading offices in Beijing, Guangzhou, Shenzhen, and Dalian. Our professional trading team has established a specialised petroleum and petrochemical products trading and distribution network, handling imports, exports and domestic distribution of various petroleum products. With its corporate strength and quality service, Fortune Oil’s trading business enjoys a good reputation in China’s petrochemical industry and maintains sound business partnerships with domestic as well as international suppliers and customers.
With its sales network and financial advantage, Fortune Oil imports mixed aromatics for customers in southern China, Shandong and Tianjin. The company also leverages on the competitive edge provided by the West Zhuhai storage terminal, and has commenced the sale of imported mixed aromatics. During FY 2015/2016, Fortune Oil imported over 400,000 tonnes of mixed aromatics.
With Fortune Oil’s extensive trading experience and its shareholders’ links to the Middle East, the trading department has developed significant LPG supplies and become one of the main suppliers to China Gas Holdings Limited. This demonstrates the significant value of the cooperation and synergy between Fortune Oil and CGH.
In 2015, the Chinese National Development and Reform Commission approved the import of crude oil by regional refineries. Fortune Oil seized this opportunity and commenced the import of crude oil from Russia, the Middle East and Indonesia to those refineries. Within 5 months, Fortune Oil imported approximately 1 million tonnes of crude oil. In the coming years, increased import quota assigned to regional refineries will bring more business opportunities to Fortune Oil’s trading department as Fortune Oil continues to grow its supplies of oil and related products to China.