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Air Products Forms Joint Venture with Chinese Energy Company
September 11, 2017
Air Products, an industrial gases company in Pennsylvania, has signed a $1.3 billion joint venture (JV) agreement with China-based Lu’An Clean Energy Company.
The partnership will expand Air Products’ scope of supply serving Lu’An Mining (Group) Co.’s syngas-to-liquids production in Changzhi City, Shanxi Province, China.
Air Products has already invested $300 million to build, own and operate four large air separation units (ASUs) to supply the Changzhi City site.
Under the new agreement, Air Products will contribute the ASUs and invest a further $500 million for a 60 percent ownership in the new JV.
With this majority position, Air Products will fully consolidate the JV financial results.
Lu’An will contribute the gasification and syngas clean-up system, will receive $500 million of cash and will have a 40 percent ownership in the new JV.
The new joint venture, to be called Air Products Lu’an (Changzhi) Co., Ltd., will own and operate the ASUs and gasification and syngas clean-up system.
The JV will receive coal, steam and power from Lu’An and will supply syngas to Lu’An under a long-term, onsite contract.
Closing is expected as soon as possible, pending initial operational start-up and government and regulatory approvals. Seifi Ghasemi, chairman, president and chief executive officer of Air Products said, “We are delighted to have Lu’An, a leading clean energy company in China, as our joint venture partner. The creation of this world-class JV is perfectly in line with our stated strategy of deploying our significant cash to grow by acquiring existing assets and expanding our scope of supply to include syngas.”
“Extending our strong partnership/relationship with Air Products through this new joint venture enables us to take advantage of world-leading project management and operational expertise to deliver syngas for this landmark energy project,” said Li Jinping, Chairman of Lu’An.
Air Products reminds shareholders that the agreement is subject to government and regulatory approval.
Copyright: North America Procurement Council, Inc. PBC