CNOOC taps new LNG projects

CNOOC taps new LNG projects

SINGAPORE (Reuters): China's leading offshore oil and gas
producer CNOOC is tapping opportunities to build China's second
and third liquefied natural gas (LNG) terminal after piloting the
first one, Chinese industry sources said on Friday.

CNOOC, parent of CNOOC Ltd, is in talks with local governments
in eastern coastal provinces of Fujian and Shandong to study the
possibilities of building LNG receiving terminals.

"CNOOC and local authorities of Fujian and Shandong have been
in discussions for a while. Some letter of intent is expected to
be signed," a senior industry source close to the talks told
Reuters from Beijing, but declined to say when.

The official did not comment on the terminal capacity and the
time frame for constructions.

Designated by the central government, the offshore player is
the leading stake holder in China's first LNG project due
onstream by end 2005 in the southern province of Guangdong.

CNOOC holds a 33 percent stake of the three million ton per
year terminal costing $616 million, while oil major BP holds 30
percent.

Fujian and Shangdong have been picked as the sites for the
potential receiving terminals as both have little or no gas
access.

"Imported natural gas will be the only gas supply for Fujian
and Shangdong as both won't have enough supplies even though it's
close to CNOOC's production in nearby Bohai Bay," the source
said.

He said CNOOC would push forward the new projects more
aggressively than the one in Guangdong, which has been dogged by
slow decision-making due to the many Chinese participants
involved.

"The Guangdong project has nine Chinese equity holders. CNOOC
will continue to be the leading partner in the new plans, but not
with so many participants this time," the official said.

Chinese partners in the CNOOC-led Chinese consortium for the
Guangdong terminal are five Guangdong companies and three Hong
Kong firms.

China's booming east coast, which includes provinces of
Shangdong, Jiangsu, Zhejiang, Fujian, Guangdong and the city of
Shanghai, are seen as the biggest gas-consuming areas in the
following decade.

Targeting the market are the country's massive 4,200-kilometer
onshore gas pipeline from northwest Xinjiang to Shanghai, the gas
development in the East China Sea and the imported LNG, industry
sources said.