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Longwei Petroleum Investment Holding Ltd. (Longwei), an energy company engaged in the storage and distribution of fuel oil, diesel and gasoline in China, has commenced operations at its Huajie fuel storage depot in northern Shanxi Province.

Longwei received its first shipment of petroleum to the new Huajie facility during the second week of October and began to sell products to customers on October 11, 2012.

Longwei finalized the RMB 700 million (approximately US $110.6 million) purchase of the assets of Huajie Petroleum Co. Ltd., a fuel storage depot with a 100,000-tonne storage capacity, on September 26, 2012.

The Huajie facility is located in Xingyuan Township, Fanshi County in northern Shanxi Province. The assets purchased include fuel storage tanks with a 100,000-tonne capacity with accessory facilities and equipment, delivery and distribution platforms, including a dedicated rail spur and a vehicle loading and unloading station.

"The Huajie facility nearly doubles our storage capacity to a total of 220,000 metric tons and extends our reach into the fast-growing industrial region of northern Shanxi Province," said Cai Yongjun, chairman and chief executive officer of Longwei. "We are pleased to have closed on the Huajie asset purchase using our own cash resources without dilution to our shareholders."

The purchase also includes a 3,000-square-metre office building and land use rights for 98 acres of land adjacent to the main regional rail line. The new facility is in a growing industrial and mining region, approximately 200 kilometres north of Taiyuan.

"We are confident we can quickly ramp up sales at the Huajie facility based on regional demand and relationships we have established," said Michael Toups [pictured], chief financial officer of Longwei. "Closing on the Huajie facility has allowed us to increase our regional presence and attract new customers. With the addition of the Huajie facility, we have strengthened our lead as the largest non-state-owned fuel storage and distribution business in the province."

Longwei recently reported revenues of US $510.6 million and net income of US $65.1 million for the fiscal year ended June 30, 2012. The company also reported total assets of US $342.3 million and a book value per share of $3.31.

Image: Michael Toups, chief financial officer of Longwei Petroleum Investment Holding Ltd.