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CNOOC clinches supply deal for liquefied natural gas

By Hu Meidong and Wang Xu (China Daily)
Updated: 2006-09-21 08:55

State-owned CNOOC is now leading the race to build LNG terminals along the eastern coast of China as the government aims to diversify energy supplies and reduce its heavy reliance on coal and oil, instead of pushing the use of cleaner natural gas.

The government so far has approved the construction of two terminals, the one in Fujian and another in South China's Guangdong Province. CNOOC, which owns the two facilities, started up the country's first LNG terminal in Guangdong Province this June. The Beijing-based company has plans to build terminals in Shanghai, Ningbo and Zhuhai by around 2010.

China's top three oil companies, PetroChina, Sinopec and CNOOC, plan to build a string of LNG terminals in coastal areas such as Shanghai, Shandong and Jiangsu, despite the surging prices.

Earlier media reports this month said CNOOC would soon announce a deal to buy liquefied gas from Malaysian state oil company Petronas.

CNOOC is reportedly awaiting government approval for the deal, which will supply LNG to a planned terminal in Shanghai, the nation's economic powerhouse.

Industry officials were quoted as saying the price for the deal was about US$5 to US$6 per million British thermal unit (BTU), but below the current market prices of US$9 to US$11 per million BTU.

CNOOC, one of the nation's three biggest oil companies, has been seeking overseas assets to drive its growth and help sate the energy demands of China's economy, which has expanded about 10 per cent annually in recent years.

In the first half of this year it completed its biggest-ever acquisition, a US$2.3 billion buyout of a Nigerian oilfield.

In a mid-year report, CNOOC said its net profit jumped 37.6 per cent from a year earlier to 16.28 billion yuan (US$2.04 billion). The company also said it would churn out 9 per cent more oil and gas, or 168 to 170 million barrels of oil equivalent in 2006.