China Gas Holdings Ltd, a leading Chinese piped gas operator, has agreed to buy a 51 per cent stake in Qingdao Taineng Natural Gas for HK$250 million (US$32 million).

"With this acquisition China Gas has won exclusive rights to supply piped gas in Qingdao for 30 years," said the company on its web site.

"Taineng Natural Gas recorded a loss of approximately 24 million yuan (US$3 million) in the first nine months of this year. The company's total assets were about 592 million yuan (US$75.9 million)," said the announcement to the Hong Kong exchange yesterday.

It is the company's second natural gas project in Shandong Province. In September it set up a joint venture to distribute piped gas in Dezhou, in the province's northwest.

The Hong Kong-listed company is taking advantage of the increased consumption of natural gas in China. This June it signed an agreement to set up a 1 billion yuan (US$128 million) natural gas venture in Dalian, in northeast China's Liaoning Province.

The venture is China Gas's first natural gas project in northeast China. The investment will improve the company's earnings and provide it with a steady income stream, said a company statement.

Sales of the company jumped 81 per cent to HK$475.1 million (US$ 60.91 million) for the six months ended in September, from HK$262.5 million (US$33.65 million).

In September China Gas signed an agreement with the Asian Development Bank (ADB), under which ADB will provide financial assistance of approximately US$150 million.

After the transaction, ADB will become a long-term strategic investor in China Gas, owning approximately 4.88 per cent of its shares. ADB will also appoint a member of its senior management staff as a non-executive director of China Gas.

Besides China Gas, several Hong Kong-listed gas companies have quickened their pace in the mainland, including Panva Gas Holdings Ltd and Hong Kong and China Gas Co Ltd (Towngas).

Earlier this year Panva Gas paid 74.3 million yuan (US$9.5 million) for a 90 per cent stake in Fuxin Gas, which supplies gas in Fuxin, 170 kilometres west of Shenyang, capital of Northeast China's Liaoning Province.

It also acquired a 50 per cent stake in Hangzhou Liquefied Petroleum Gas for 25 million yuan (US$3.2 million).

This month Towngas took over Panva Gas in a HK$3.2-billion (US$410 million) deal, under which Towngas will hold a 45 per cent stake in Panva Gas.

After the deal, Towngas will have 60 projects across 55 cities and 12 provinces in China. Of those, Panva will operate 35 piped gas projects in 32 cities serving over 1.7 million users with a combined piped gas sales volume of 367 million cubic metres in the first half of 2006.

China, which is the world's second largest energy consumer after the United States, has encouraged the use of cleaner fuels over the past few years.

The nation, which relies on coal and oil for 90 per cent of its fuel needs, wants gas to account for about 8 per cent of its energy mix in 2010.