Chairman's Statement

Looking back to 2019, global economic growth slacks and adjustments in international energy landscape accounted for constant geopolitical conflicts. Against the backdrop of energy crisis and climate change as focal disputable issues worldwide, energy replacement and green and low-carbon development became the common global mission. For the past 40 years since reform and opening-up, China, apart from resolving internal issues, has actively assimilated into the global markets through leveraging its own comparative advantages, along with pressing ahead with reforms and opening-up. Not only has China been able to maintain an impressive economic growth domestically, it has also contributed to global economic development. China has become the world’s largest energy producer and energy consumer, and has decisive influence on the world’s energy landscape. It is an important force in the global energy structure adjustment. At the same time, we can also see that China is also facing an external environment with intensifying protectionism and unilateralism, and the downward pressure on the domestic economy is increasing. With the acceleration of industrialization and urbanization, energy demand continues to grow, and the construction of a stable, economic, clean and safe energy supply system face huge challenges.

In response to the challenges, the central government actively promotes energy structure reform and unveils a host of environmental protection policies to curtail air pollution and speeds up the progress of “replacement of coal with gas” initiative in key regions. A sustainable growth for natural gas segment has been enabled by few favourable factors, including the integration of national pipeline network and the price marketisation of natural gas, as well as gradual introduction of industry supportive policies. As one of the large-scale urban gas operators in China, the Group closely follows the national policies and the general trend, and makes consistent investment in the urban gas pipeline network so as to scale up the replacement of coal with gas initiative in rural areas and the construction of beautiful countryside. The Group accelerates the pace of development of LPG wholesale and retail trading, LNG trading, thermoelectric, value-added services, distributed energy and other new businesses. Our “112N full-fledged industry development strategy” steers us to build an integrated energy ecosystem.

Looking into the future, in order to cope with macroeconomic slowdown and adjustment of industry policies, the Group will focus on “cost reduction, boosted efficiency, transformation and expansion” to promote business growth. Meanwhile, the Group will press ahead with cost reduction, efficiency boosting, reforms, along with marketisation, and exploration of new business segments to foster core competitiveness. Regarding natural gas business, the Group will continue to strengthen and optimise organisational structure. The Group aims to breed organization vitality through institutional structure reform. The Group will further refine operation and cost control, and press ahead with development of various businesses through marketisation and digitalisation. In addition, the Group will seize the opportunities provided by national pipeline network reform, imported gas from Russia and the implementation of the China VI standard to materialise market expansion and rapid growth in operation efficiency. For the LPG business, apart from “vertical integration” along the industry chain, the Group will intensify the “horizontal synergy” in the urban pipeline gas business in terms of both market expansion and resources procurement. The Group will continue to promote the vertical integration, and intensify expansion of the downstream market presence. The Group, by leveraging its comparative advantages, will build the “4G” energy network to unleash the synergy due to the two-pronged development of natural gas segment and LPG segment. For the value-added business, the Group will continue to focus on promoting China Gas’s “New Retail” platform. By means of a customer-centric approach, grip network management and new retail system, the Group boosts online and offline integration services that further enhance operation and services standards. In the year ahead, the Group will actively respond to the industry and market reforms and shoulder for various social responsibilities. Adhering to its corporate mission “Enable Natural Gas Circulation; Promote Social Harmony and Wellness”, the Group strives to initiate progress at both industrial and social level. Applying the overall rationale of “scaled production of low-carbon energy, substitution of clean energy for traditional energy, diversification of energy supply, efficiency boost of terminal energy consumption, smart transformation of energy system”, the Group aims to provide “smart” energy for the society and the public all alike, to facilitate green-related initiatives in national economic development, as well as to create maximised value for shareholders, society and employees. Finally, I, hereby, would like to express my sincere gratitude to all Board members for their undue contribution and support, and all employees and management team for their resolute endeavour and passion.

Chairman of the Board of Directors