Natural gas is a convenient, clean and light-carbon energy resource that is a necessary component in China’s energy strategy of combating global climate change by promoting energy efficiency. It is the cleanest fossil fuel, producing less carbon dioxide than either coal or oil and far fewer pollutants than other fossil fuels. Results of a study by the South Coast Air Quality Management District of California indicate that 72% of the total cancer risk from toxic air contaminants in the district is attributable to particulates from diesel fuel. Diesel and gasoline engines are primary emitters of benzene emissions and 1,3 butadiene in urban areas, whereas natural gas vehicles – because of their cleaner burning fuel – emit little of either carcinogen.
The Energy Bureau of the National Development and Reform Commission (NDRC) predicts that natural gas will make up 6% of energy consumption in 2010 in China and 10% by 2020, compared to 3% in 2007. This is an industry with plenty of growth potential, as the evolving world is becoming more environmentally aware and realizing the potential health benefits of using natural gas rather than other fossil fuels. With its proprietary technology and experienced management, Sino Gas International Holdings (OTC BB: SGAS) is well-positioned to capitalize on the growing popularity of natural gas in China.
Sino Gas, a natural gas company headquartered in Beijing, with subsidiaries in five other provinces within the People’s Republic of China, is one of the first and largest compressed natural gas suppliers in the country that serves both residential and industrial customers. The Company currently serves approximately 145,000 residential and 7 large industrial customers.
Sino Gas’ revenue is closely related to the development of the real estate industry in its targeted cities in China. A large portion of the Company’s revenue comes from new residential apartments. Natural gas facilities in new apartments are often required by local governments, who aim to promote the use of natural gas to improve local residents’ quality of life through cleaner air and fewer pollutants.
Currently, the key components of the Chinese government’s spending are infrastructure and clean energy. This helps maintain the upward trend in gas sales for Sino’s business. In the 3rd and 4th quarters of 2009, after the current government spending policy was issued, the Company saw a significant jump in revenues. Despite the ups and downs of the Chinese real estate market during the 2008 crisis, the real estate market will likely continue to grow because of the continuous urbanization in China. Even with the steady growth of the real estate market in China, the Company is planning to reduce its dependency on connection fees by investigating opportunities to diversify its business by expanding into related areas, such as pipeline and gas station businesses. As Sino Gas International Holdings develops into more cities in the coming year and reaches out to industrial users in particular, it expects to see strong growth and capitalize on the many opportunities afforded by the alternative energy market.
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