Qatar LNG Supplies to China Will Start September, Official Says

By Winnie Zhu

Nov. 28 (Bloomberg) -- Qatar will start supplying liquefied natural gas to China in September under a 25-year contract, said an official with China National Offshore Oil Corp., the country’s third-biggest oil company.

The cargoes will first be shipped to two receiving terminals China National Offshore is operating in Guangdong and Fujian provinces, Wu Wenjia, a marketing manager with the company’s gas and power unit, said in an interview yesterday. The fuel will then be transported to a terminal in Guangdong the company is planning to operate by 2011, said Wu.

“We are doing a feasibility study on the project and it may start construction next year once we get state approval,” Wu said in the city of Xiamen. “As long-term LNG supply is secured, we don’t see any obstacles in getting the go-ahead.”

China National Offshore operates the Dapeng terminal in Guangdong, the nation’s manufacturing hub, and one at Putian in Fujian. It plans to build further plants as part of the country’s plan to almost double the use of the cleaner-burning fuel. The company in April signed an agreement to buy 2 million metric tons of Qatari gas a year for 25 years.

The Beijing-based company is yet to decide on the location of the Guangdong facility, to be known as Yuedong terminal, said Wu. The coastal cities of Shantou, Chaozhou, Jieyang, Shangwei and Meizhou have been short-listed as possible sites.

The receiving terminal will be able to receive at least 2 million tons of LNG a year and investment in the facility will exceed 10 billion yuan ($1.5 billion), he said. It’s designed to supply the fuel to the five coastal cities.

Australia, Malaysia

China National Offshore is currently building its third terminal in Guangdong province, at Zhuhai, with Shenzhen Energy Group Corp.

China National Offshore has signed term contracts to buy LNG from Australia, Malaysia and Indonesia for the terminals in Dapeng, Putian and Shanghai.

State oil companies, including PetroChina Co. and China Petroleum & Chemical Corp., are planning to build 10 LNG receiving terminals on the nation’s northern and eastern coasts. PetroChina, the country’s largest oil producer, in April signed a 25-year agreement to buy 3 million tons of LNG from Qatar starting 2011. Qatar is set to produce 77 million tons a year by 2010.

Global LNG trade will triple to 500 million tons a year by 2030, Stephen Wong, president of Exxon Mobil Corp.’s gas marketing, Greater China and Japan, said yesterday in Xiamen.

LNG is natural gas that has been chilled to liquid form, reducing it to one six-hundredth of its original volume, for transportation by ship to destinations not connected by pipeline. It’s turned back into gas for distribution to power plants and other buyers.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net.