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Jan. 16, 2012—POAGS, Australia’s largest bulk and general stevedoring firm, has turned to radio frequency identification to manage hundreds of heavy vehicles daily at its remote Utah Point Bulk Facility, at the Port Hedland port, in Western Australia.

Utah Point serves the booming mining industry in Western Australia’s Pilbara region, providing shipping services to small and expanding mining companies. The facility readies up to 24 metric tons for shipping per annum—primarily comprising iron ore and manganese—and manages approximately 370 heavy vehicles daily. According to POAGS, a heavy vehicle arrives at its Utah Point site every four-and-a-half minutes, 24 hours a day, seven days a week.

With so many heavy vehicles arriving at, and moving throughout the Utah Point site, says Ray Connell, POAGS’ general manager of information technology, it was vital that the management of their movements be precise, reliable and safe, which is where RFID comes in.

“The high volume of heavy traffic provided a number of significant challenges,” Connell says. “Firstly, we had to ensure the efficient flow of heavy-vehicle traffic to the allocated stockpiles, and ensure availability of loading equipment to avoid delays and queues. Secondly, we he had to ensure accurate tipping of the product to the correct stockpile to prevent contamination. Thirdly, we wanted to automate the operation to safely manage it with acceptable staffing levels and deliver a high level of visibility of all activities.”

At first blush China Gas, a small company that distributes natural gas in Chinese cities, would seem unlikely to end up at the centre of a hostile takeover battle that has pitted a large Chinese state-owned oil company against a diverse range of small investors, including energy companies from Korea, India and Oman.

Hong Kong-listed China Gas recently rejected a hostile offer from Sinopec, China’s largest oil and gas refiner, and ENN, a Chinese gas distributor. But the takeover saga has heated up as several shareholders have increased their stakes in China Gas since the offer, in anticipation of a possible renewed bid from Sinopec and ENN.

The rare hostile takeover attempt underscores how high interest is running in China’s natural gas sector, and analysts and bankers believe that more consolidation is in store as China’s natural gas market matures.

China, the world’s largest energy consumer, is increasingly favouring natural gas as a fuel source, partly because it is cleaner-burning than crude oil. China’s voracious demand for natural gas – which is growing at about 20 per cent annually – has become a major driver for global liquefied natural gas markets as well as for global M&A.

This drive has steered big Chinese acquisitions overseas, like Sinopec’s $2.5bn purchase of a stake in Devon Energy, or Cnooc’s multibillion dollar investments in Chesapeake Energy, a US company specialised in shale gas.

China Gas, with a market cap of just over HK$16bn (US$2.1bn) and core net profits of $410m during the first half of last year, has a range of gas distribution networks in more than 140 Chinese cities. Sinopec, China’s second-largest oil and gas producer by production, has an extensive petrol distribution network but lacks urban gas distribution.

The takeover saga began on December 13 last year, when Sinopec and ENN made an unsolicited offer of HK$3.50 a share for China Gas, a 25 per cent premium to the previous day’s closing share price.

Although that offer was swiftly rejected by the company as “opportunistic”, Sinopec and ENN have still submitted applications for regulatory approvals, including anti-monopoly approvals, and those close to the deal say the consortium would likely make another offer if those approvals are granted.

“Sinopec already has upstream assets, so they need to buy more downstream,” said Danny Huang, oil and gas analyst at RBS. “As China’s gas consumption grows these [downstream] companies will get more gas projects.”

China Gas has at times appeared troubled, with its founder Liu Minghui jailed in late 2010 and investigated for embezzlement, news that caused share prices to sink. Mr Liu has been released from prison but the investigation is understood to be ongoing.

The company still seems to be growing quickly, with gas sold during the first half of 2011 up 30 per cent from the previous year.

China’s fragmented natural gas distribution sector is expected to grow rapidly, with China’s big oil and gas companies seeking to consolidate distribution through more acquisition.

Large cities such as Beijing and Shanghai have their own local networks for piped distribution of gas, and in third and fourth-tier cities the distribution might be handled by a small nationwide company or by an entirely local company.

“Gas is just starting out as an energy source in China,” said Laban Yu, oil and gas analyst at Jefferies SP in Hong Kong. “Natural gas demand is expanding 19 per cent a year, so a lot of new distribution is going to be built.”

Mr Yu expects that the next few years will see fresh listings of small but growing natural gas distributors, followed by a potential period of consolidation as these companies make acquisitions or are acquired.

Meanwhile, the unusual shareholder profile of China Gas makes it likely that any takeover battle will be fiercely fought. Significant shareholders include the Asian Development Bank, two subsidiaries of Korea’s SK Group, Oman Oil Company and an Indian gas company.

Since the Sinopec/ENN offer was announced, SK E&S announced it would purchase a further five per cent stake in China Gas in addition to its 7.8 per cent stake. That move makes SK less likely to sell its shares unless Sinopec and ENN come up with a bigger offer.

SK Group said it was not considering a hostile takeover of China Gas.

Additional reporting by Song Jung-a in Seoul