BP, CNOOC joint venture buys first Chinese LNG

Guandong Dapeng LNG Co. Ltd. (GDLNG)—a joint venture of BP PLO and CNOOC Ltd.—has purchased China's first shipment of LNG on the spot market.

Eric Watkins
Senior Correspondent

LOS ANGELES, May 10 -- Guandong Dapeng LNG Co. Ltd. (GDLNG)—a joint venture of BP PLO and CNOOC Ltd.—has purchased China's first shipment of LNG on the spot market, suggesting that rising domestic demand may be forcing changes in the country's pricing policies.

Delivered at the Guandong LNG terminal near Shenzhen, the GDLNG cargo originated from Oman's Qalhat LNG, a joint venture of Oman 47%, Oman LNG 37%, Union Fenosa Gas of Spain 7%, Itochu Corp.3%, Mitsubishi Corp. 3%, and Osaka Gas 3%.

According to one energy executive, the shipment suggests that China's domestic markets may be starting to force the hand of the central government in Beijing. For 2 years many large cities along China's coast have faced gas shortfalls because of the central government's refusal to approve the signing of many long-term LNG contracts.

The central government has persisted in the belief that it could push for the same low price secured in its first long-term deal with an Australian supplier in 2002.

But suppliers, eyeing substantially higher prices for LNG now than in 2002, have refused to agree to special terms for China. As a result, the Chinese have secured just two long-term LNG supply contracts since 2002.

Contact Eric Watkins at hippalus@yahoo.com.

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