ASIA/PACIFIC: Guangdong LNG pilot project to capture offshore associated gas

China's strategic requirement for oil and gas is too important to ignore the conversion of natural gas to liquid form and storing it until needed. China has 15.8 trillion cu meters (tcm) in undeveloped gas res-erves. The country's utilization ratio is only 2.2%, compared to the average worldwide 23%,

Easy-to-store liquefied natural gas (LNG) has an advantage of adjusting to market changes. The presence of the capability to store gas in liquid form is that it takes advantage of large volumes of offshore natural gas that must be adjusted at the production or pipeline gauge, instead of simply being stored for higher demand situations.

LNG is important in China's strategic need to utilize two markets and two kinds of resources to meet demand and improve the domestic environment, especially in the southeast coastal areas where a flourishing economy and a wide gap in energy supplies exists.

CNOOC project

In 1995, CNOOC was charged by the State Planning Commission with the responsibility for working out a plan to capture gas in liquid form. By year-end 1999, the state officially approved establishment of the first phase of the Guangdong LNG pilot project, which involved an LNG terminal and a gas trunkline.

CNOOC investigated resources and markets at home and abroad and conducted pre-feasibility study on LNG imports, along with an economic study of Guangdong and Fujian provinces.

The proposed wharf, LNG terminal, and gas trunkline complemented an electric power plant which was to be modified from oil-fired to gas-fired. The facility will distribute gas to the Zhujiang Delta and Hong Kong region. The project is a Sino-foreign cooperative joint venture in which CNOOC has a 33% stake, and includes Shenzhen Investment Holding Corp, Guangdong Electric Power Holding Co, Guangzhou Gas Co, Dongguan Fuel Industrial General Co, and Foshan Gas Co (31%), Hong Kong Electric Light Group Co (3%), and Hong Kong Chinese Gas Ltd (3%). Foreign firms will hold up to 30%.

At a briefing held in Beijing on August 8, CNOOC presented the package to representatives of 80 companies. Texaco and Philips took an interest in a participating stake and signed a confidentiality agreement.

By 2010, the calculated demand for natural gas will be about 100 bcm, while domestic output will be about 70 bcm, calculates CNOOC. The state will encourage long-term import of LNG to bring in more gas to meet needs.