China's biggest oil producer PetroChina will submit a feasibility study to the government this month on building a liquefied natural gas (LNG) terminal in Northeast China, whose fuel supply may come from Australia, Iran or Qatar.

 

PetroChina has completed a feasibility study to construct 6.8-billion-yuan (US$850 million) LNG receiving facilities in Dalian of Liaoning Province, to supply the imported cleaner fuel to local consumers, Xiao Desheng, vice-president of PetroChina's Dalian LNG project, told an industry forum yesterday.

 

"We will submit the study to the National Development and Reform Commission (NDRC) for final approval within the month," Xiao said.

 

It normally takes several months for the government to wrap up the approval procedures, said Xiao, adding that he could not predict an exact date for the Dalian project.

 

When asked about gas supplies, Xiao said talks with global suppliers from Australia, Iran and Qatar were still under way.

 

"We have entrusted the PetroChina International Co Ltd (Chinaoil) to conduct negotiations with the foreign sellers, but a final supply agreement has yet to be finalized," Xiao said.

 

To market the liquefied gas, PetroChina has already inked agreements or memoranda of understanding with as many as 22 consumers from five cities in Liaoning Province, Xiao said.

 

Natural gas demands from the 22 are expected to reach 6.8 billion cubic meters (bcm) by 2010, accounting for 60 percent of the total consumption of the province, according to the PetroChina official.

 

The Dalian LNG first-phase project was originally planned to come on stream by 2011, annually supplying 3 million tons of liquefied gas, or 3.9 bcm of un-liquefied gas.

 

The capacity would double in the second-phase development, Xiao said.

 

Domestic oil majors, which also include Sinopec and China National Offshore Oil Corp (CNOOC), are vigorously seeking fuel supplies for planned LNG terminals along the eastern coast, although the rising global gas prices have prolonged talks.

 

Another PetroChina senior official told China Daily earlier last month that the country's biggest oil company was in negotiations with more than 10 international suppliers to source fuel for its three terminals, including the one in Dalian.

 

PetroChina has got the initial governmental go-ahead to conduct feasibility studies to build LNG facilities in Dalian, Tangshan of Hebei Province and Rudong of Jiangsu.

 

China National Offshore and its partner Shanghai-based Shenergy have secured LNG supplies from Malaysia's national oil company Petroliam Nasional Bhd for their planned Shanghai terminal, a source who did not wish to be named said yesterday.

 

The companies are awaiting central government approval for the supply contract, and they may announce details of the deal later this year, the source said.

 

The Shanghai terminal will cost 4.6 billion yuan (US$575 million) and is expected to start supplying 3 million tons of LNG a year by 2008. China National Offshore owns 45 percent of the terminal and Shenergy the rest.

 

China National Offshore has received governmental approval for two LNG terminals, one each in Guangdong and Fujian.

 

The Guangdong venture has already received its first shipment of 60,000 tons of LNG from Karratha in Australia.

 

Heather R. Ting, president of BP Gas China, at the end of last month said that the global oil giant had reached an agreement with China National Offshore to supply 2.6 million tons of LNG annually for 25 years to its Fujian terminal, and they were waiting for final approval from the Indonesian Government.

 

(China Daily July 27, 2006)