Other Opportunities
The Five-Year Plan includes a Chinese government commitment to increase energy efficiency, reduce pollution and to increase usage of cleaner combustion fuels such as natural gas. According to a 2006 report entitled "International Energy Outlook 2006" by the EIA, China's LNG (Liquid Nature Gas) imports are expected to grow from 1.0 Mmt/year in 2006 to between 20.9 and 25.9 Mmt/year by 2015. Currently, natural gas accounts for a relatively small percentage of China's energy consumption; however, a liquid natural gas, or LNG terminal at Guangdong began operations in May 2006 with a capacity of 3.7 Mmt/year and plans to expand to a capacity of between 6.2 to 6.7 Mmt/year by 2008. Additionally, another LNG terminal is currently under construction at Fujina-Xiuyu port, with a planned capacity of 2.6 Mmt/year in 2008 and plans to subsequently expand to a capacity of 5 Mmt/year. China National Offshore Oil Corporation, or CNOOC, is the lead construction partner for both of these new terminals. Further, an LNG terminal with a capacity of at least 2.6 Mmt/year is approved for 2011 at South Soko and an LNG terminal with a capacity of 3 to 3.5 Mmt/year is planned for 2011 at Rudong. As China's use of natural gas increases, the demand for gas transmission pipes is expected to increase. The Company is also conducting research and development on the manufacture of pipes for gas transmission, including the potential for steel pipes with FRP liners.
Hanwei is currently exploring opportunities to produce FRP pipes for water heating and electrical systems in liquid natural gas, or LNG, terminals. In addition, the Company has identified gas transmission pipes as a product that is complementary to its current business and that will enable the Company to expand its product lines within the energy industry. As China's use of liquid natural gas increases, the demand for gas transmission pipes is expected to increase. To that end the Company is conducting early stage research and development for gas transmission pipes, including the potential for steel pipes with an FRP coating, and exploring the potential to license existing technology.
