Regional LNG: CNOOC may build up to 7 LNG import plants: Report
Friday, July 23 2004 - 06:42 AM WIB
CNOOC, which controls the country's LNG market, may build terminals in Liaoning province in the northeast and in Jiangsu in the east, chairman Fu Chengyu said Friday in Beijing. They would supplement five others planned or in construction in China's richest provinces, at an estimated cost of US$600 million each.
'I must buy LNG,' said Fu, who is also chief executive of Hong Kong-listed unit CNOOC Limited. 'We need to buy at least three million tons for each terminal that we're planning to build.'
Power producers such as Huaneng Power International Inc and Datang International Power Generation Co are switching to gas to cut pollution and reduce fuel costs after crude oil prices rose to a record this year. Increased imports of LNG to China will raise competition for other buyers of the fuel in Asia.
China, which relies on coal and oil for 90 per cent of its fuel, wants gas to account for 8 per cent of its energy supply by 2010 from about 3 per cent. Major Chinese cities and 24 of 27 provinces have experienced power outages this year as economic growth pushed demand for power beyond generating capacity. To ease shortages, Beijing has introduced investment constraints on power-hungry industries and is encouraging generators to build more plants.
Power stations from the US to Taiwan are switching to natural gas because prices of competing fuels such as oil have surged. The average oil price in New York has risen in five of the past six years, to US$37.04 a barrel this year from US$14.40 in 1998.
CNOOC is building LNG terminals in Guangdong and Fujian and is seeking government approval to build another in eastern China's Zhejiang province and a fourth in Tianjin. It is studying the feasibility of a fifth terminal in Shanghai. The plants may cost between US$500 million and US$600 million each, Wang Jianwen, vice-president of CNOOC Gas & Power Ltd, said recently.
CNOOC wants to more than double the size of its terminal in Guangdong to 10 million metric tons in the next 10 years, Fu said. The Guangdong terminal will receive as much as 3.7 million tons a year of LNG starting in 2006.
The North West Shelf venture in Western Australia, which also includes Royal Dutch/Shell Group, BHP Billiton, BP plc, ChevronTexaco Corp, Mitsui & Co and Mitsubishi Corp, agreed in August 2002 to sell at least 3.3 million tons a year of LNG to the Guangdong terminal for at least 20 years, starting in 2006.
CNOOC wants to conclude talks by the end of this year to buy LNG from ChevronTexaco's proposed A$11 billion Gorgon gas project in Australia, Fu said.
LNG is gas that's been compressed and cooled to liquid form so that it can be loaded onto a ship for transportation to markets that are too far for a pipeline. The LNG gets returned to gas form and piped to power plants, factories and households. (*)