1. Business review of natural gas
(1) Decrease in sales volume of natural gas as compared with 2014
During the reporting period, the Group recorded a decrease in the growth of its sales volume of natural gas under the double pressure of the decline of the macro-economic and the decrease in the prices of coal and petroleum, and realized a sales volume of 1,127 million cubic meters for the year, representing a decrease of 26.0% as compared with 2014, of which the wholesales volume amounted to 787 million cubic meters, representing a decrease of 6.1% as compared with 2014 and accounting for 69.84% of total sales volume; the retail sales volume amounted to 273 million cubic meters, representing a decrease of 55.7% as compared with 2014 and accounting for 24.22% of total sales volume; the sales volume of CNG amounted to 67 million cubic meters, representing a decrease of 2.9% as compared with 2014 and accounting for 5.94% of total sales volume
(2) Actively promoting the construction of infrastructural projects
The Group increased 259.9 kilometers of natural gas pipeline in 2015. As of 31 December 2015, the Group accumulatively operated 1,973.4 kilometers of pipeline, including 602.8 kilometers of long-distance transmission pipeline and 1,370.6 kilometers of city gas pipeline; accumulatively operated 14 distribution stations and 8 gate stations.
During the year, the pipework for ten countries in middle
During the reporting period, the pipework for ten counties in middle
(3) Further exploration of downstream markets of natural gas
During the reporting period, the Group actively explored the natural gas market. In particular, new non-residential users increased by 306 (including 154 small business users) to a total of 1,620 users (including 1,093 small business users). New residential users increased by 32,860 (new cards increased by 23,347 users) to a total of 116,412 users (new cards increased to 87,155 users).
During the reporting period, the Group vigorously developed the city gas projects. The Group completed several equity cooperation projects in Raoyang and Qinghe and formed a joint venture to develop the local gas market, which has accumulatively established its market presence in 27 city gas markets in the province.
(4) Vigorously developing CNG and LNG businesses
During the reporting period, the Group rapidly developed CNG and LNG businesses. During the year of 2015, the Group has developed a total of 18 CNG and LNG projects. Of these projects, two CNG primary filling stations in
station obtained the completion acceptance; the main construction of Ningjin CNG primary filling station, two LNG refilling stations in Shahe and Chengde, Zhaoxian Anda L-CNG refilling station and Yuanshi CNG refilling station were completed; two CNG secondary filling stations in Chengde, two LNG refilling stations in Neiqiu and Gaoyi L-CNG refilling station were under construction. As of 31 December 2015, the Group accumulatively operated five CNG primary filling stations, seven CNG secondary filling stations and one LNG refilling
By the end of 2015, Shahe LNG liquefaction plant has completed the installation of its process units and auxiliary system as well as the LNG transportation facilities.
(5) Formation of multi gas resources supply pattern
During the reporting period, the pipework for ten countries in middle
(6) Safe operation safeguarded by advanced technology
During the year, Hebei Natural Gas, a subsidiary of the Group, took a proactive approach to solve the technical problems and obtained two utility model patent certificates, namely “wedges gripping tool” and “new wedges”, respectively. Those two patents will enhance the Company’s safe operation capability of the gas-fired power plant and provide a more reliable safety measure to handle the gas leakage incident.
2. Key financial indicators of natural gas
During the reporting period, the Group recorded a natural gas sales revenue of RMB2,796 million, representing a decrease of 28% as compared with 2014, and accounting for 66% of the Group’s sales revenue. The decrease of revenue was mainly attributable to (1) the continued slowdown in macro economy and the significant decrease in gas sales resulting from certain users of the Group used the alternative energy with lower cost; and (2) the decrease in sales price of natural gas in 2015. In particular, the pipe wholesale business recorded sales revenue of RMB1,660 million, representing 59% of the Group’s sales revenue from natural gas; retail business, such as city natural gas, recorded sales revenue of RMB753 million, representing 27% of the Group’s sales revenue from natural gas; CNG business recorded sales revenue of RMB199 million, representing 7% of the Group’s sales revenue from natural gas. Other revenue was RMB184 million, representing 7% of the Group’s sales revenue from natural gas.
(2) Operating cost
During the reporting period, the operating cost (including cost of sales, selling and distribution expenses, administrative expenses and other expenses) of the Group’s natural gas business amounted to RMB2,707 million, representing a decrease by 20% from the amount of RMB3,366 million last year. This was mainly due to a decrease in average purchasing unit price and purchase volume of natural gas as compared with last year.
(3) Profit from operations
During the reporting period, the profit from operations of the natural gas business was RMB103 million, representing a decrease by 81% from last year, mainly due to the provision for bad debts of RMB214 million and a decrease in gas sales. Gross profit margin was 14.7%, which was 1.8 percentage point lower than that of 2014, mainly due to the adjustment of prices of gas for the year and the decrease in gross profit margin as compared with last year.