ROVworld Subsea Information

Pioneer Chinese LNG Project Inks Key Deals
Date: Monday, May 17, 2004 @ 06:17:27 EDT

China's first LNG terminal and trunk pipeline project, due to start up in Guangdong province in 2006, has signed a batch of agreements in Beijing, including loan deals with a consortium of domestic banks, and gas off-take and construction deals.

The project, led by state-owned China National Offshore Oil Corp (CNOOC) and BP, covers an LNG import reception terminal with initial capacity of 3.7-mil metric tonnes (mt)/yr located near Dapeng village, east of Shenzhen.

It also includes 370km of trunklines stretching from Shenzhen through to Dongguan, Guangzhou, Foshan and Zhujiang to supply gas to city gas and power plants in Guangdong and Hong Kong.

BP said the "milestone" agreements signed by Guangdong Dapeng LNG Co Ltd last week underpinned "commercial and operational success" of the project, in which the UK major, with a 30% interest, is sole foreign participant.

When completed, the project would supply imported gas from Australia's North West Shelf (NWS) Venture, where BP is also a partner, to Chinese customers in the Pearl River Delta area, Guangdong Province and Hong Kong.

The NWS project is to supply 3.32-mil mt/yr under a 25-year LNG sales and purchase agreement, valued at $18-bil. Final terms of the LNG supply contract are still being discussed, and ultimate volumes could rise as high as 4-mil mt/yr, consortium operator Woodside Petroleum said late last year.

BP expects the Guangdong terminal to start commercial operations in June 2006.  The deals signed in Beijing Apr 30 include 25-year term gas sales contracts with ten Chinese power generation and city gas companies, involving supply of 3.2-mil mt/yr of natural gas from re-gasified imported LNG.

Some 70% of the pipeline natural gas will be sold to five power plants, one of which is an existing oil-fired plant being converted to natural gas. The remaining four are yet to be built. About 30% of the gas is destined for town gas distributors.

Power plant gas buyers are the Huizhou, Qianwan, Zhujiang, and Meishi plants, and a Hongkong Electric Co plant in Hong Kong. City gas off-takers are Shenzhen Gas Corp Ltd, Guangzhou Gas Co, Dongguan Fuel Industrial General Co, Foshan/Nanhai Gas Co, and a Hongkong and China Gas Co town gas project.

Source: Platts

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