The nation's first liquefied natural gas (LNG) import project will kick off under trial operation in two months, when a large LNG shipment is set to arrive in Shenzhen from Australia.

 

Operation of the project at Guangdong Dapeng LNG Terminal is expected to help alleviate the pressure of energy short supply in Guangdong, where over 90 percent of the energy depends on imports and inflows from other places.

 

Lu Jian, a senior manager with North West Shelf Australia LNG PTY Ltd in Beijing, said the first 138,000-ton LNG shipment should arrive April 28, and the project is "very likely" to become operational around June 27.

 

The Australian firm is expected to ship over 3 million tons of LNG annually after the project becomes operational, according to the contract signed in late 2004 between Guangdong Dapeng and North West Shelf Australia.

 

Related trunk lines run a total of 334 kilometres in length to deliver the environment-friendly fuel to the cities of Shenzhen, Dongguan, Guangzhou and Foshan in the Pearl River Delta, and Hong Kong, as well as five power plants in the Delta region at the initial phase.

 

Sources say gas consumption in the Chinese mainland is expected to reach up to 250 billion cubic meters annually by 2020. About half of the demand will have to resort to LNG imports.

 

Lu said her firm has been eying other LNG projects in China including Guangdong's second LNG project in Zhuhai, which kicked off construction late last year.

 

But she declined to comment further.

 

A handful of LNG projects are either under construction or waiting for the go-ahead in Hainan, Fujian, Zhejiang, Shanghai, Jiangsu, Hebei, Beijing and Liaoning. However, only two sale-and-purchase contracts have been signed so far.

 

The nation's second LNG sale-and-purchase contract was inked with an Indonesian LNG supplier for the project in East China's Fujian Province.

 

The massive Guangdong LNG project involves an investment of 7.3 billion yuan (US$900.12 million), in which the China Nation Offshore Oil Corp (CNOOC) occupies a dominant 33 percent stake.

 

North West Shelf Australia LNG PTY Ltd, a leading LNG supplier in Australia, has six equal participants: BHP Billiton Petroleum (North West Shelf) Pty Ltd, BP Developments Australia Pty Ltd, Chevron Australia Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd, Shell Development (Australia) Proprietary Ltd, and Woodside Energy Ltd.

 

The "take or pay" contract for the Guangdong LNG deal will be effective for 25 years.

 

The Chinese side has the obligation to either take delivery of the LNG or pay a specified amount during the 25 years.

 

(China Daily February 24, 2006)