Domestic LNG refueling stations are continuously expanding under the drive of environmental policies.

 According to data released by market research firm Longzhong Information, the number of LNG refueling stations in China will increase by 13% year-on-year in 2024.

But according to a reporter from China Energy News, there are two major contradictions hidden behind the current prosperity of the LNG industry - price fluctuations leading to profit compression, and the integrated layout of the giant industry chain causing competitive imbalance.

 At present, the LNG industry is constantly developing under the drive of environmental policies, but at the same time, price fluctuations and profit compression coexist. The integrated layout of the industrial chain of large enterprises intensifies competition, and small and medium-sized gas stations face difficulties in survival, requiring continuous innovation and breakthroughs.

In 2024, thanks to favorable environmental policies, LNG, as a clean alternative energy source, will accelerate its penetration in freight and long-distance transportation scenarios.

 In addition, the replacement of diesel heavy-duty trucks with natural gas heavy-duty trucks has further promoted LNG companies in various regions to accelerate the layout of gas station networks.

 From the perspective of regional distribution, currently LNG refueling stations are mostly concentrated in gas source areas such as Xinjiang and Inner Mongolia, as well as coastal LNG receiving stations around Shandong, Jiangsu, Zhejiang, etc., showing an overall trend of "more in the east and less in the west".

The eastern coastal areas have developed economies, busy transportation, and a large number of gas stations.

 For example, there are over 800 LNG refueling stations in Guangdong Province, accounting for more than 25% of the national total.

 From the perspective of competitive landscape, in recent years, the enterprises with the highest number of LNG refueling stations are still large comprehensive enterprises with high market concentration.

The two giants of China Petroleum and China Petrochemical, relying on gas station resources, quickly added refueling services and upgraded a large number of stations to oil and gas mixing stations. Not only did they significantly expand downstream service terminals, but they also achieved a leapfrog growth in market share through this strategy, accelerating the reshaping of the industry landscape, "said Sun Yang.

According to a report released by China Research Institute of Industry, the market size of LNG refueling stations is expected to reach about 18 billion yuan by 2023, and is expected to increase to 25 billion yuan by the end of this year. The average annual compound growth rate from 2020 to 2025 is about 15%, and it will maintain a stable growth trend in the next three years. The market size is expected to exceed 40 billion yuan by 2028.

The rapid expansion of the market size is in stark contrast to the profitability of the industry, and the survival space of small and medium-sized gas stations is further squeezed due to the lack of economies of scale and bargaining power.

Single station investment in gas stations is high and the return cycle is long. Currently, the average daily sales volume of small and medium-sized stations is generally less than 20 tons, and the investment payback period is as long as 5-8 years. This' cost-effectiveness' puts pressure on small and medium-sized LNG gas stations.

 ”A person in charge of an LNG refueling station said, "Small and medium-sized refueling stations may have difficulties in understanding and implementing policies, obtaining qualifications, and facing significant policy and regulatory pressure. If they operate non compliantly, they may face risks such as fines and suspension of business for rectification

In addition, the fluctuation range of the landed price of imported LNG in 2024 is between 2500 yuan/ton and 3000 yuan/ton, and the profit margin of the terminal selling price is limited after adding transportation costs.

 The person in charge revealed that small and medium-sized stations have difficulty locking in low-priced gas sources through long-term agreements due to their small procurement scale, and their cost control ability is weaker than that of comprehensive large enterprises.

The average retail price of sampled LNG refueling stations in 2024 has increased by 26% compared to 2020, but profits have plummeted by 53% during the same period.

 The average price in the first four months of this year decreased by 8.61% year-on-year, and profits further declined by 21.9%.

 Large enterprises can significantly reduce costs by controlling upstream gas sources, operating midstream with light assets through substitute processing models, and relying on their own terminals for direct supply, forming overwhelming competitive advantages in the terminal market and further squeezing the survival space of small and medium-sized gas stations.

 The rise of new business models such as gas hydrogen mixing stations and comprehensive energy stations has also put pressure on small and medium-sized LNG refueling stations with single functions to replace them.

In fact, small and medium-sized LNG refueling stations are not without opportunities. They can carry out differentiated operations and improve service quality based on their geographical location, customer groups, and other characteristics.

 ”The person in charge of the LNG refueling station mentioned above stated that in terms of business types, in addition to traditional LNG refueling business, diversified businesses such as CNG refueling and L-CNG refueling can be expanded to meet the needs of different customers.

 We can also provide professional LNG refueling services for surrounding logistics parks, industrial parks, etc., forming a regional competitive advantage.

 ”

By optimizing procurement channels, establishing long-term stable cooperative relationships with LNG suppliers, striving for more favorable procurement prices and supply conditions, and reducing procurement costs.

 To reduce dependence on a single gas source, actively expand gas source channels, and reduce gas source risks.

 We also need to pay attention to the dynamics of domestic LNG production enterprises, establish cooperative relationships with potential production enterprises, and ensure stable supply of gas sources.

 ”The person in charge of the LNG refueling station mentioned above added.

Industry insiders suggest that cooperation can be carried out between small and medium-sized gas stations to achieve resource sharing and complementary advantages. At the same time, cooperation can be strengthened with LNG suppliers, automobile manufacturers, logistics companies, etc., forming a complete industrial chain and jointly promoting the development of the LNG gas station industry.

The person in charge of the LNG refueling station mentioned above pointed out that the key to the survival of small and medium-sized refueling stations lies in "precise positioning and flexible survival". Through differentiated services and agile cost control, sustainable business models can be established in the gaps between giants.

 Although industry integration is inevitable, regional cultivators can still rely on localization advantages to win survival space