Regional LNG: PetroChina plans Shanghai LNG project

China's oil and gas producer, PetroChina , is aiming to build a liquefied natural gas (LNG) terminal in Shanghai, but it has not yet drafted a concrete plan, an industry source was quoted by Reuters as saying Tuesday.

PetroChina had a preliminary draft to build a LNG receiving terminal in Shanghai and buy into an overseas natural gas field to supply the Chinese market, said the source, who asked not to be identified.

There was speculation at a gas conference in Tehran this week that Iran had struck a LNG supply deal with PetroChina. A PetroChina spokesman in Beijing said he was not aware of such a deal.

Zhuhai Zhenrong Corp, one of China's four major state-oil traders, said in March it had signed an memorandum of understanding with Iran to import more than 110 million tons of liquefied natural gas over 25 years for $20 billion.

Beijing has been driving state oil firms to secure overseas assets to fuel the world's fastest-growing major economy as domestic oil and gas output declines.

State-owned CNOOC group and its major Hong Kong-listed unit, CNOOC Ltd , China's largest offshore oil and gas producer, remains the dominant player in the LNG business.

"PetroChina does not want to see the business being dominated by CNOOC," the industry source said.

CNOOC Ltd has taken stakes in gas fields in Australia and Indonesia as a condition for committing to long-term supply deals from the projects.

CNOOC group is the main stakeholder in China's first two LNG projects in the southern provinces of Guangdong and Fujian, which will have a combined annual capacity of 6.3 million tons and are slated for operation in 2006 and 2008, respectively.

Sinopec Corp , China's second-largest oil company, has also proposed to Beijing to build a LNG terminal in the northern province of Shandong.

The source said PetroChina planned to build the Shanghai terminal by itself and not together with its parent China National Petroleum Corporation (CNPC).

But PetroChina cannot decide when it should build the Shanghai terminal or how big the terminal should be until the west-east natural gas pipeline, from the western Chinese region of Xinjiang to Shanghai, operates at full capacity in 2005, the source said.

"If the gas from the pipeline is not enough, the LNG terminal will be built. The projects need to be coordinated," the source added.(*)