Regional LNG: China yet to approve feasibility study on LNG terminal

China's first liquefied natural gas terminal project, to be located in the southern Guangdong province, may not be able to meet a 2006 deadline for completing terminal construction, an official with one of the major stakeholders of the project said Friday.

"We are facing pressure to meet the deadline," the official said.

The start of construction has been delayed from March until after October this year because the government hasn't yet approved the project feasibility study, he told Dow Jones Newswires.

A multibillion project like this one will involve unanimous backing from all cabinet members, he said. The terminal construction will cost 7.3 billion yuan ( $1=CNY8.28), while LNG imports will cost US$14 billion.

"It is difficult to get all the (cabinet) members to sit down and discuss the project due to their different schedules," the official said, adding it's unlikely the discussion will happen in the next one or two months.

China has agreed to import about 3.7 million tons/year of LNG from Australia from 2006.

To make up for lost time, the stakeholders of the project have started ground- leveling at the site of the terminal, the official said, adding that construction won't formally start without government approval.

The project has nine shareholders, including CNOOC and BP PLC, with 33% and 30% stakes, respectively.

The project shareholders are in the final stage of negotiations with utility companies like power plants to sign LNG purchase agreements, the official said.

"We have completed talks with nine of 11 of the power plants and gas distributors on the purchase volume and price of the LNG supply, he said.

Of the nine users, three are power plants and six are town gas distribution companies. (*)