Honghua Announced the "Sino-US Integrated Solution to LNG Industry" and Entered into the First Offshore LNG platform Construction HOA

BEIJING, Oct. 28, 2016 /PRNewswire/ -- Honghua Group Limited ("Honghua" or the "Group") (Stock Code: 196.HK), a leading global land drilling rig manufacturer, is pleased to announce that the Group held the Sino-US LNG industry development seminar in Beijing today, and announced the "Sino-US Integrated Solution to LNG Industry" leading by the Group along with the Sino-US top companies in LNG industry. Witnessed by experts and top companies of LNG industry worldwide, Shanghai Honghua Offshore Oil and Gas Equipment Co., Ltd. ("Honghua Offshore"), a wholly-owned subsidiary of the Group, entered into the first offshore LNG platform ("PLNG") construction Heads of Agreement (HOA) with Argo LNG Partners, LLC. ("ARGO"), with a total amount of approximately US$1.8 billion.

At the Sino-US LNG industry development seminar, Honghua, the creative leading corporation along with Sino-US top partners, including GE, Braemar (the world's top technology service company), Wood Group (the largest offshore engineering and service company in the world) and China Aerospace (Shanghai) etc, announced the "Sino-US Integrated Solution to LNG Industry". Honghua together with Sino-US top partners initially introduced fixed platform technology into LNG factory design and developed the PLNG. Comparing with traditional LNG liquefaction factory, PLNG has unique advantages, including: it can be established in American federal waters to avoid several years approval period; the integration of port and factory, converting overseas EPC project to Chinese manufacturing to achieve low cost, controllable cycle, and convenient construction. It can be designed as fixed or movable platform with high flexibility to adjust its layout according to global resources market.

The first set of PLNG will be delivered to clients after modular manufacture, installation and debugging under EPC model with the "Honghai" crane (the world biggest offshore crane with a lifting capacity of 22,000 ton) in the factory of Honghua Offshore. The delivery would be more efficient and reliable than traditional model. The solution is fully consolidated the advantages of American LNG liquefaction equipment and Honghua's EPC construction. The first set of PLNG is scheduled to be installed in the U.S. Gulf of Mexico and take 2 to 3 years to complete the construction, including 4 production platforms, 4 storage platforms, 1 accommodation platform, 1 central processing platform, and a pier which is available for LNG vessel carrying 30,000 to 260,000 cubic meters LNG to park. The designed annual LNG processing capability and storage capability is max to 3,600,000 tons and 240,000 cubic meters respectively.

This Sino-US LNG industry development seminar also invites top companies of the LNG industry as well as the experts worldwide, to explore and discuss the cooperation of Sino-US LNG industry development. Benefitted from the significant success of U.S. LNG revolution, the U.S. will become the largest LNG export country in the world, while the natural gas consumption in China is increasing rapidly due to the enforcement of environment governance and energy structure adjustment. In 2015, the natural gas consumption in China was less than 200 billion cubic meters, counting less than 6% in terms of total amount of primary energy consumption, which was largely lower than the world average level of 24%. It is expected the natural gas consumption in China will maintain the annual growth of 8%. In the future, importing the stable-supplied and cost-effective LNG from U.S. through the Sino-US Integrated Solution to LNG Industry will help to reduce intermediate section so that Chinese natural gas users can enjoy a long-term and stable supply of LNG at the best price, and help to optimize the energy structure of China to cope with the increasingly severe challenges from environment and climate. Furthermore, importing LNG from U.S. will also realize the diverse supply of natural gas to China and benefit the stable development of natural gas as a national strategy.

Mr. Zhang Mi, Chairman of Honghua commented, "We are pleased to announce 'Sino-US Integrated Solution to LNG Industry' and enter into the first PLNG construction HOA. The cooperation this time, not only presents the Sino-US' breakthrough in development and utilization of clean energy, but a significant and innovative cooperation between the two parties in manufacturing top-end equipment. We always adhere to the concept of 'Creative Manufacturing' and have successfully developed the new 'Super Offshore' model with integrated construction of offshore platform, implemented the concept of 'Offshore Equipment Manufactured Onshore' and the unique advantage of "Honghai" crane this time, as well as expanded the global market in advance. We introduced a number of advanced technologies and solutions in the world into the PLNG's design & construction, including the FSP patent technology of General Dynamics (the largest corporation of aerospace and national defence in the U.S.) and the FSP-LNG storage tank technology jointly developed with Braemar and Shanghai Aerospace. Looking ahead, Honghua will continue adopting the concept of 'Creative Manufacturing', not only capture more opportunities from high-end LNG equipment manufacturing in the golden age of this industry, but continue integrating the LNG industrial chain to improve efficiency and seek diverse development."

About Honghua Group Limited (Stock Code: 196.HK)

Honghua is one of the largest land drilling equipment manufacturers in the world, which is primarily engaged in manufacturing conventional land drilling rigs, digital drilling rigs, accessories of drilling rigs, as well as the parts and components for the drilling rigs or for the maintenance of the drilling rigs in operation. Leveraging on the strong R&D strength, high-quality production facilities and mature international sales network, the Group's 80% products have been sold to a large number of famous enterprises all over the world, including major oil-production regions such as North America, Middle East, and emerging markets including South America, India, Russia, China and Africa. In 2014, Honghua has obtained sales orders of offshore drilling platform and started to manufacture in its Qidong offshore equipment production plant. Based on the existing solid foundation of the land drilling rigs equipment, Honghua will implement diverse development strategies, and expand to become the integrated enterprise which is involved in the interaction development of onshore and offshore areas and three major sectors, including equipment manufacturing and oil and gas resources development (especially the unconventional oil and gas area), as well as engineering services.

About Argo LNG Partners, LLC.

Argo LNG Partners, LLC is a project company formed by a group of experienced technique experts and financial expert in US oil & gas industry to produce and export LNG. It is a Delaware corporation with offices in Houston, Texas. The principals behind Argo, led by Mr. Erik Saenz, had been developing a project offshore Louisiana called United LNG in collaboration with Freeport McMoRan.

SOURCE Honghua Group Ltd.