Regional LNG: China launches $2.7 billion Fujian LNG project

China has launched a US$2.7 billion liquefied natural gas (LNG) project in the southeastern province of Fujian, the China Offshore Oil Press said.

The initial phase of the LNG project, China's second, includes building a terminal designed to handle 2.6 million tonnes of LNG a year, a trunk gas pipeline and a dock that can anchor LNG tankers of up to 165,000 cubic metres, the newspaper said in a report seen on Sunday.

Domestic oil major China National Offshore Oil Corp (CNOOC), parent of Hong Kong and New York-listed CNOOC Ltd , holds 60 percent of the terminal, pipeline and dock projects, while Fujian Investment and Development Co Ltd owns the remaining 40 percent, it said.

The first phase also includes the construction of three gas-fuelled power plants and gas networks in the Fujian cities of Fuzhou, Putian, Quanzhou, Xiamen and Zhangzhou, it said.

CNOOC holds 10-25 percent stakes in these projects, it said.

Land reclamation from the sea for the terminal started last weekend in the city of Putian and would not finish until May 2004, the newspaper said.

Construction of the first phase project was scheduled to finish by the end of 2006, and commercial operations would start in April 2007, the newspaper said.

CNOOC planned to raise the LNG handling capacity to five million tonnes a year when the second phase of the Fujian project is complete in 2012.

KEY LINK

The gas pipeline would be a "key link" in CNOOC's proposed natural gas trunkline along China's booming eastern and southern coasts, the report said.

Industry sources have said CNOOC would assess this year whether to build a 2,000 km (1,240 mile) trunk pipeline from Shanghai in the east to the southern island province of Hainan.

Costing at least $1 billion, the pipeline could take 10 years to complete.

Last year, CNOOC and oil giant BP Plc signed a 25-year LNG supply contract to provide up to 2.6 million tonnes of LNG annually from BP's giant Tangguh field in Indonesia to the Fujian terminal beginning in 2007.

CNOOC Ltd bought from BP a 12.5 percent stake in the Tangguh gas project for $275 million last September through the acquisition of interests in production sharing contracts.

China's first LNG project, a three-million-tonne-per-year terminal in the southern province of Guangdong is due to come on stream in 2005.

CNOOC, the leading partner, holds 33 percent, BP owns 30 percent, and the rest is held by local firms in Guangdong and Hong Kong.(*)