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Construction starts on Dalian LNG regas terminal

Eric Watkins
Senior Correspondent

LOS ANGELES, May 20 -- China National Petroleum Corp. broke ground for construction of its first LNG regasification terminal, a project valued at some $1.4 billion, in the port city of Dalian in Liaoning Province.

Initially, the Dalian terminal will store 3 million tonnes of LNG and supply 4.2 billion cu m/year of gas. Later, it will store 6 million tonnes of LNG and supply 8.4 billion cu m/year of gas.

Chinese officials said the facility will need to source LNG from the international spot market in its first year of operation until delivery of contracted long-term supplies from Australia commence.

It is not clear which of two Australian projects will be the supplier of LNG to the Dalian facility: CNPC subsidiary PetroChina last year signed agreements with Australia's Woodside Energy for LNG supply and Royal Dutch Shell PLC's Gorgon project in Western Australia, to import 2-3 million tonnes/year of LNG for 15-20 years, starting in 2012.

Earlier this month, PetroChina also signed a 25-year agreement with Qatargas and Shell for 3 million tonnes/year of LNG, while CNPC signed an agreement with Qatargas for a long-term supply of 2 million tonnes/year of LNG.

In addition to its Dalian facility, CNPC also is constructing an LNG regasification facility at Rudong in east Jiangsu Province.

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