CNOOC Might Announce New LNG Supply Deal

China National Offshore Oil Co. (CNOOC) could announce a liquefied natural gas (LNG) supply deal in about two to three months, its first in four years, reported China Knowledge Online. This move signals that the company, which is leading China into the LNG market, is ready to pay higher prices. Prices have approximately doubled since China’s first landmark deal four years ago at $3 per million British thermal unit (BTU). The country appears to be accepting that if it continues to stall supply talks, it will not be too successful in promoting the use of LNG in the country. According to an anonymous CNOOC senior official, the deal will restart CNOOC’s drive to obtain supplies for its five planned terminals by end 2007. Chinese media had recently reported that CNOOC was in advanced talks with Malaysia to supply the Shanghai terminal. CNOOC, whose LNG terminal in southern Guangdong province was China’s first, plans to build another four on the east and southeastern coast in Fujian, Shanghai, Ningbo and Zhuhai by around 2010. Competitors Sinopec and PetroChina are also planning about half dozen terminals along the northern coast. The second phase of CNOOC’s Guangdong terminal will increase capacity by 6.2 million tons per year (tpy), while the other four projects would need 3 million tpy each from around 2010. To supply its five terminals, CNOOC alone could need to buy as much as 18 million tpy of LNG, near the imports into South Korea, the world's second-largest LNG buyer. (Source: China Knowledge Online)