* Gong Jialong once ran China's largest private oil firm
* Jailed for embezzlement in 2007, his conviction was
* Gong's troubles show risks for entrepreneurs in China
* Plans comeback with major gas export project in Canada
By Chen Aizhu
BEIJING, March 19 A Chinese oil tycoon, who lost
his fortune after being jailed for embezzlement in 2007, aims to
make his comeback with an ambitious project in Canada to export
gas back to his homeland.
Gong Jialong, a truck-driver-turned-entrepreneur, ran
China's largest private oil firm in the 1990s before China shook
up the sector to create two state energy giants, Sinopec and
China National Petroleum Corporation.
His Tianfa Group had a market capitalisation of 17 billion
yuan ($2.81 billion) at its peak, but things fell apart when in
2006 Gong was arrested and later jailed for fund embezzlement
and the improper disclosure of information for a listed firm.
Gong's empire was swiftly broken up and most of the business
was sold to state-owned firms at a government auction.
Freed in 2008, his conviction was overturned in 2011 on
Following his release, Gong invested in two small oil and
gas producers in Alberta, Canada, and has set up a firm to build
a liquefied natural gas (LNG) plant in Stewart, a tiny port on
British Columbia's northwest coast.
"I am fascinated by natural gas...the project we're planning
is similar to what I used to be involved in," said Gong, 60,
speaking in his downtown Beijing office, with resource maps of
Canada hanging on the walls.
Canada Stewart Energy Group Ltd, set up with a local
partner, applied to Canadian regulators on March 5 for a licence
to export 30 million tonnes of gas a year, the biggest quota
applied for by any firm so far.
Canada's National Energy Board has so far approved seven LNG
export projects along its Pacific coast and is reviewing four
others including the Stewart proposal.
It aims to start gas exports from a floating facility with
an annual capacity of 5 million tonnes in 2017, before
increasing to a full capacity of 30 million tonnes (4 billion
cubic feet per day) by 2025, the firm said in its application
posted on a government website.
SHRUGS OFF SCEPTICISM
Gong is the latest of a number of businessmen little known
outside China targeting mega deals overseas.
Wang Jing, a Chinese telecoms entrepreneur, shot to
prominence last year after announcing plans to build a $50
billion shipping channel in Nicaragua to rival the Panama Canal,
while Chinese recycling tycoon Chen Guangbiao said in December
he was looking to buy the New York Times.
Some experts questioned whether Gong's firm had the
financial muscle or could secure the gas resources to get a
project, estimated by Gong to cost $30 billion, off the ground.
There are already about 30 other LNG proposals in North
America, some led by global players like Shell and
Chevron, aiming to use a shale boom to supply Asian
markets. Gas demand in China alone is set to quadruple by
A Singapore-based banker at a European lender said Gong
would need to specify where the gas supplies were coming from
and unless if was a major discovery few banks would finance it.
In addition, banks would require a 10-20 percent equity
investment for such as massive project before they could
consider loaning money, the banker said.
An executive at a private Chinese oil firm, who has known
Gong for more than a decade, said the businessman was highly
driven and his previous setbacks should strengthen his resolve.
"I do have my doubts, though, about his Canadian LNG
project... His idea could be just to get an approval first and
then slowly build it up."
Gong shrugs off sceptics, saying that the main challenge is
to win over aboriginal groups in the area to work on the land.
"Once that is achieved, it should be easier to find
investors to pump gas from the abundant reserves in Canada to
sell them into our pipeline," said Gong, in a rare interview.
He is confident he can secure Chinese customers and said the
northern port city of Tianjin, which consumes 30 million tonnes
of gas a year, was a possible buyer, noting China had plenty of
receiving terminals to handle the imports.
Gong, who spends half his time in Canada, said he had
short-listed partners, including Chinese state-run oil majors,
private firms and global companies, to invest. He did not name
RISKS FOR ENTREPRENEURS IN CHINA
In China, Gong's troubles illustrate the risks entrepreneurs
face particularly in areas where they could challenge the
state's dominance in key industries.
Gong worked as an oil driller and a truck driver before
starting his own liquefied petroleum gas (LPG) trading firm,
Tianfa in 1988 in Hubei province.
Tianfa grew rapidly to become China's largest private oil
firm with nearly 200 gas kiosks when it went public in 1996.
But a restructuring of the energy sector in 1998, which saw
Sinopec Corp <0386.HK > and PetroChina given control
of China's fuel market, contributed to Tianfa's collapse.
"Our fuel licence was revoked overnight," Gong said, adding
that Tianfa's fuel trucks were raided and its oil confiscated.
"A company that we owned for 18 years suddenly fell apart
and nearly 20,000 staff were out of work. This is something
unheard of in many foreign countries," he said.
($1 = 6.0527 Chinese yuan)
(Additional reporting by Rod Nickel and Julie Gordon in Canada;
Editing by Fayen Wong and Ed Davies)