November 22, 2002

China Awards LNG Project to British Petroleum Company

China decided to select British Petroleum Company (BP) as the foreign partner for the country's first liquefied natural gas (LNG) project located in the southern coastal province of Guangdong, announced the project executive office Monday.

The company is invited to sign a cooperation principle agreement with the Chinese partners on the project and then conduct joint feasibility studies. It is hoped that an joint venture can be established within this year. The Chinese side expects that the construction of an imported LNG receiving terminal will start in the latter half of 2002 and the operation start-up is by the end of 2005.

Foreign petroleum companies responded actively to the LNG terminal bidding initiated by the Chinese side in August 2000. Nearly 30 foreign companies, including the major players such as Chevron, Exxon-Mobil, Shell and TOTAL, participated in the bidding.

According to the project executive office, the terminal, with an annual handling capacity of 3 million tons, will be situated in Shenzhen and the 400-kilometer gas grid will sprawl across the Pearl River Delta. The imported gas will first fuel households in Shenzhen, Foshan, Guangzhou and Dongguan and two gas-fired power plants in Shenzhen.

The LNG terminal and pipeline project will cost around 5 billion yuan (US$600 million). The Chinese side will take up a majority share of 70 percent with the rest going to the foreign partner.

The Chinese side comprises of the China National Offshore Oil Corporation, the Shenzhen Investment Holding Corporation, the Guangdong Electric Power Holding Company, the Guangzhou Gas Company, the Dongguan Fuel Industrial General Company and the Foshan Municipal Gas Management General Company.

(Xinhua 03/19/2001)

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