By the OGJ Online Staff
LONDON, Mar. 20�BP plans to spend more than $180 million on the first phase of a joint venture project to construct China's first liquefied natural gas import terminal, the British energy giant said Tuesday.
The company said that it has been selected "to enter exclusive negotiations to secure the position as the foreign partner" in a JV tasked with the development of the Guangdong project in southern China. The project will be made up of an LNG regasification terminal near the city of Shenzhen, with a capacity of 3 million tonnes/year, and an associated 300-km pipeline linking the facility to the region.
Phase 1 of the project is expected to be on stream in 2006, said BP.
BP said it expected to jointly carry out a feasibility study with its "Chinese sponsors," which, subject to approval by the country's authorities, would lead to the creation of a JV company responsible for the construction and initial operating phase of the new plant.
"This is a significant new step in expanding our China operations, and an excellent strategic fit with our Asia Pacific gas reserves," BP chief executive Sir John Browne said.
Browne said the Guangdong project would capitalize on China�s rapidly growing gas markets and "provide a platform for further growth for BP in the province of Guangdong."
BP is targeting a 30% equity stake in the project, partnering with a Chinese industrial coalition made up of China National Offshore Oil Corp., which would hold 33%, five local Guangdong companies, holding a total interest of 31%, and two Hong Kong energy companies, which would share a 6% stake.
BP anticipates a Phase 2 expansion to be undertaken that would add a further 2 million tonnes/year of LNG regasification capacity and an extra 180 km of pipeline. Phase 2 would be brought stream in 2008, it said.
According to BG figures, gas currently meets just 2% of China�s energy needs, but this percentage is projected to increase to 7-8% by 2010.
Last 2000, BP acquired a 2.2% equity position in PetroChina Co. Ltd., the integrated Chinese oil and gas company, through its initial public offering, followed in September by a $400 million investment in Sinopec via its IPO. Then, in August, BP signed a framework joint venture agreement with PetroChina "as a first step" aimed at jointly developing the gas market in the Shanghai region.