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CLP Eyes Mainland For LNG Terminal

The Financial Times By Tom Mitchell in Hong Kong – September 12 2008 02:51

China Light and Power, Hong Kong’s largest energy company, has signalled its willingness to invest in a new liquid natural gas-receiving terminal on the Chinese mainland, possibly with ExxonMobil.

CLP and ExxonMobil, which jointly operate three power plants in the self-governing territory, had planned to build a $1bn terminal on an ecologically sensitive island, angering local environmentalists.

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Last month, however, the Chinese and Hong Kong governments signed a memorandum of understanding allowing state-owned energy companies to sell gas to CLP from offshore oil fields and via an overland pipeline.

The MoU also called for the construction of an LNG receiving terminal in Guangdong province, averting the need for CLP’s planned receiving terminal in Hong Kong.

“Having a role in that [Guangdong] LNG terminal would be very important for us,” said Richard Lancaster, CLP commercial director, on Thursday, adding that the company had axed plans for a Hong Kong terminal.

The Guangdong project would be led by a Chinese state oil company and possibly also involve ExxonMobil. The US oil major confirmed that it would participate in a feasibility study for the proposed Guangdong terminal.

Both CLP and ExxonMobil have substantial investments in China but participation in the LNG terminal would be their first such venture on the mainland.

Mr Lancaster also reiterated CLP’s intention to finalise a provisional LNG supply agreement reached earlier this year with BG Group of the UK, which would be delivered to the terminal in Guangdong. In June, BG Group agreed to supply CLP and ExxonMobil with 1.3bn cubic metres of gas a year from 2013 to 2033.

CLP estimates that its gas requirement will reach 3.4bn cu m per year by 2013 and 6bn cu m by 2023.

According to Mr Lancaster, China National Offshore Oil Corp has indicated that it could supply another 2bn cu m per annum from gas fields in the South China Sea.

Under the terms of last month’s Sino-Hong Kong energy MoU, PetroChina will also examine the feasibility of supplying Hong Kong from its second west-east pipeline, which transports gas overland from fields in China’s northwest and central Asia.

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