ICIS: China LNG plant investors keen to exit business on margin woes

A growing number of investors in China’s liquefied natural gas (LNG) plants are keen to exit the business, which is currently suffering from shrinking margins amid an uncertain market outlook, industry sources said on Thursday.

These investors are typically suppliers of bulk commodities, while others can be from totally unrelated industries like real estate, they said.

Promise of strong returns lured investors to pour in funds into China’s LNG plants over the past two years, resulting in rapid increase in the country’s gas liquefaction capacity, industry sources said.

But the tide has since turned, with cost of feedstock gas rising following a recent fuel pricing reform adopted by the government. This, coupled by the huge LNG capacity, triggered a downtrend in margins since the start of the year, with some plants now incurring losses, industry sources said. MORE