ENN Ecological to Buy Toshiba's LNG Business for USD15 Million
Liao Shumin
/SOURCE : Yicai
ENN Ecological to Buy Toshiba's LNG Business for USD15 Million

(Yicai Global) Nov. 9 -- ENN Ecological Holdings will buy Toshiba's liquefied natural gas business, the Chinese company said in a statement releasing its major asset restructuring plan yesterday.

ENN Ecological will designate its overseas unit to buy 100 percent of the equity of Toshiba America LNG, wholly owned by Tokyo-based Toshiba's US unit Toshiba America, for USD15 million in cash, and the latter will inherit the rights and obligations of LNG business-related contracts signed by Toshiba's Japanese unit Traction Energy Storage System, which will pay ENN's overseas unit a contractual consideration of USD821 million, per the statement.

LNG is a mix of methane and ethane that converts natural gas into liquid form for ease and safety of transport, public information shows.

ENN will assume a contract to liquify some 115,000,000 million British Thermal Units (about 2.2 million tons) of natural gas per year between Toshiba America LNG and Freeport's No. 3 liquefaction export plant with a term of 20 years, if the deal is successful.

The US Freeport LNG's export terminal project, located in the Gulf of Mexico in the US, will build three liquefaction production lines with an annual capacity of over 15 million tons. It is the seventh-largest LNG project in the world with all its customers being international LNG giants. The customers of Line one are Japan's JERA and Osaka Gas, while British Petroleum is the customer of Line two. Line three is working for South Korea's SK Holdings and Toshiba and is expected to go into production in the second half of 2020.

ENN will be able to quickly realize the leapfrog development of upstream gas business within two years and increase the scale of its LNG business from the current 100,000 tons to over 2.3 million tons per year after taking over the liquefaction contract between Toshiba and Freeport via this transaction, company staff said, adding this will help ENN control more overseas natural gas resources and build a complete industry chain to satisfy growing domestic natural gas demand.

ENN's revenue in the first three quarters rose 40 percent to CNY9.8 billion (USD1.4 billion) and its net profit attributable to shareholders increased 169.3 percent to CNY1 billion, per the firm's third-quarter financial report.

Its overseas holding company Santos produced 15 million barrels of oil equivalent in the third quarter, a 6 percent rise over the second quarter. It sold 20.3 million BOE in the third quarter, up 7 percent from the second. The average oil price realized was USD81 per barrel, up 3 percent compared with USD78.6 per barrel in the second quarter and up 42 percent over last year. It realized sales income of USD973 million, a rise of 10 percent on the second quarter and 18 percent from last year.

The sales of ENN's core products LNG, coal, methanol and pesticides in China grew by varying degrees in the first three quarters due to increased prices. The business volume of energy engineering, coal, methanol and pesticide was also higher than last year's price.

Editor: Ben Armour

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Keywords: ENN Ecological Holdings Co. , Acquisition , LNG