Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Sept. 12 -- Hong Kong utility CLP Holdings Ltd., which recently signed an agreement with BG Group PLC, has decided against constructing an LNG regasification plant on South Soko Island in Hong Kong, but said it might consider a similar project on the Chinese mainland.
With a shortfall in contracted gas supply occurring as early as 2012, CPL Holdings earlier this year decided to build a 3 million tonne/year LNG receiving terminal, mainly for power generation (OGJ Online, Feb. 25, 2008).
However, CLP's LNG terminal plan ran into local objections, and came to a complete halt after Hong Kong signed a deal with CNOOC in August that will extend the city's supply of gas until at least 2034.
CLP is now planning an investment in an LNG processing plant in south China and may partner with other energy companies, including CNOOC Group and PetroChina Co.
CLP said it was too soon to say if the changed plans would affect a preliminary 20-year agreement deal it signed in June with BG Group PLC that called for the supply of one million tonnes a year of LNG starting in 2013.
CLP's announcement came just a day after a local business group learned that Hong Kong's power supply would be more secure if a planned LNG terminal on the Sokos Islands went ahead.
"We can have complete control on how much to buy and how much to pay," said Larry Chow, director of Hong Kong Baptist University's Energy Studies Centre, who added that such a terminal would insulate Hong Kong from potential supply disruptions from the Chinese mainland.
That view was countered by Hong Kong's Secretary for the Environment Edward Yau Tang-wah who said the power deal between CNOOC and the city "diminished" the need to build a local LNG terminal.
Yau said a 16-km pipeline from Shenzhen would be much cheaper than CLP's $10 billion proposal for a 38-km pipeline to South Soko Island. In any case, he said the Hong Kong government was unlikely to approve CLP's planned terminal.
Contact Eric Watkins at [email protected].