CNOOC inks LNG deals

By Wang Ying (China Daily)
Updated: 2006-10-27 06:46

China National Offshore Oil Corp (CNOOC), the nation's third-biggest oil producer, has inked framework agreements to purchase LNG (liquefied natural gas) from three foreign energy suppliers to meet its ambitious import plans.

"CNOOC signed the master agreements for LNG spot cargoes with Suez SA, Total SA and Shell Eastern Trading (Pte) Ltd respectively on October 5, 6 and 10," said the Beijing-based oil company in a statement.

The two-part LNG spot trading agreements differ from CNOOC's long-term fuel supply contract for its terminals in Guangdong and Fujian provinces. The sellers and buyers will elaborate on trading details when a particular transaction is made, according to Liu Junshan, spokesman for the company.

Liu did not give specific supply and pricing figures yesterday.

Beijing-backed CNOOC is leading the push for LNG terminal construction along the eastern coast amid government efforts to diversify the nation's energy supply and alleviate its heavy reliance on coal and oil.

CNOOC plans to build as many as seven LNG-importing terminals in six provinces and municipalities, only two of which have obtained government approval and gas supplies.

The market is heating up as CNOOC's bigger domestic rivals Sinopec and PetroChina strive to take a share, with plans to build terminals in places such as Shandong, Hebei and Jiangsu.

Although industry analysts have speculated the country may postpone its massive natural gas import blueprint against the backdrop of high energy prices, Xu Dingming, a senior official from the National Development and Reform Commission, said in July that China has its own solutions to secure gas supplies for these LNG terminals, but "would not import an enormous quantity of the fuel if prices remain high."

Industry analysts said falling global crude prices might help China secure more LNG deals in the future if the situation continues.

"In the coming years, China is bound to become one of the major LNG off-takers. This agreement with CNOOC a company which expects to be purchasing between 20 and 25 million tons of LNG per year by 2010 confirms once more Suez's role at the forefront of the LNG business," Rick Grant, chief executive of Suez Global LNG, was quoted by Reuters as saying on Tuesday.

CNOOC in September announced that it had finalized a deal to buy LNG from the BP-led Tangguh project in Indonesia for its terminal in East China's Fujian Province.