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PetroChina KunLun Gas's Guizhou Branch in Strategic Agreement with Beijing Gas Blue Sky

July 8, 2018

Beijing Gas Blue Sky Holdings Limited (BGBS) announced it is working with Guizhou Branch of PetroChina KunLun Gas Co. Ltd. regarding a non-binding strategic cooperation agreement between the parties.

Pursuant to the Strategic Cooperation Agreement, the parties have agreed the following:

(1) If the investment of the gas pipeline business of KunLun Guizhou Co. in a place where the Company's city gas business is located, the project will be controlled by KunLun Guizhou Co. and invested by the Company;

(2) Developing and investing in city gas projects jointly which will then be controlled by the Company;

(3) For those city gas project which has been mutually agreed by the parties, the Company may acquire the enterprise and thereafter evaluate the cooperation with KunLun Guizhou Co. by using replacement cost approach; and

(4) Developing the LPG business in Guizhou Province, including but not limited to trading of LPG business, LPG refueling retail business, acquisition and merger of LPG business, subject to specific negotiations between the parties on individual project.

KunLun Guizhou Co. is the sole financing platform, investment vehicle and management platform for downstream natural gas business of natural gas segment of PetroChina KunLun Gas Co., Ltd. in Guizhou Province. KunLun Guizhou Co. is principally engaged in the development, project construction and operation of natural gas businesses for residential, commercial and industrial use in Guizhou Province.

Mr. Tommy Cheng, Co-Chairman and Executive Director of the Group said that "With the implementation of air pollution prevention and 'coal-to-gas' plans by the PRC government, the demand for natural gas has been increased rapidly in Guizhou Province. The entering into the Strategic Cooperation Agreement enables both parties to jointly invest and develop projects through existing sub-gas pipeline business and city gas business, including merger and acquisitions of downstream city gas projects based on replacement cost approach.

The Company and Kunlun Guizhou will also actively explore the LPG market in Guizhou Province to enhance the Company's market share in Guizhou Province, optimize the synergy benefits among various business segments, facilitate the strategic development of full natural gas value chain in Southwest region of the PRC and further strengthen the cooperative relationship between the Company and Kunlun Energy following the LNG supply agreement entered in May 2018." 

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