Regional LNG: China power sector still reluctant to buy LNG: Report
Friday, January 16 2004 - 01:14 AM WIB
As the government hasn't yet issued details of the power reform, the LNG-based power producers are reluctant to sign agreements until they are sure the reforms will provide preferential policies for higher tariffs when using clean fuels, the officials said.
They said the tariff for LNG-generated electricity should factor in the higher cost of LNG compared with that of coal.
The PPA negotiations among the LNG project partners, grid operators and the power producers started in the second half of last year, but the negotiators failed to agree on power tariffs and volumes.
However, the project partners are still targeting to start operations in June 2006. Full-scale construction of the project started in late December last year.
The LNG project, which will be located in the southern province of Guangdong, involves construction of a receiving terminal, a pipeline grid and downstream utilities.
China is expected to import about 3.7 million metric tons of LNG from Australia to Guangdong province starting in 2006. About 60% of the import volume is for power generation.
The terminal is to be built by China National Offshore Oil Corp., which holds a 33% stake, BP PLC with 30%, and Hong Kong & China Gas Co. and Hong Kong Light & Power Co., each with 3%. The remaining 31% is jointly held by gas utility companies in Guangdong.
Guangdong plans, by 2006, to complete building or retrofitting five power plants in Shenzhen city and Guangzhou city for burning LNG.
The five will house 12 generating units with a capacity of 4,200 megawatts, expandable to 8,750 MW by 2010, when LNG imports are expected to hit 6.2 million tons.
At the beginning of 2003, China started to restructure the power industry. Under the plan, power producers should offer supplies to power grid companies, and it is expected these companies will buy electricity from producers with the lowest offer prices.(*)