Guangdong Liquefied Natural Gas, China
This project involves the construction of China's first Liquefied Natural Gas (LNG) terminal and associated high-pressure gas pipelines to supply Guangdong Province with 3.3 million tons of LNG a year (four billion cubic metres a year of natural gas) by 2008.
Guangdong province is currently the largest importer of Liquefied Petroleum Gas (LPG) in China and the new LNG terminal is expected to impact greatly on the LPG market and other fuels currently used in the Province.
The project was first launched in 2002 and is due to be constructed in two phases. Phase 1 was completed in 2006 (first LNG was onstream by the end of June 2006) and Phase 2 by 2008. The project is in joint development and is shared by:
- China National Offshore Corporation (CNOOC) - 33% share
- Guangdong Province consortium (includes Shenzen Investment Holding Company, Guangdong Electric Power Holding Company, Guangzhou Gas Company, Dongguan Fuel Industrial General Company and Foshan Municipal Gas General Company) - 31% share
- British Petroleum Amoco - 30% share
- Hong Kong Electric and Light Company - 3% share
- Hong Kong and China Gas Corporation - 3%
Jones Day were the advisors on the project. The project will cost an estimated $900m to construct.
LIQUEFIED NATURAL GAS CONTRACTORS AND CONSTRUCTION
The Feasibility Study Report (FSR) was submitted to the National Development and Reform Commission (NDRC) of the Provincial Government in April 2003. The Environmental and Social Impact Assessment (ESIA) was carried out by Atkins of Hong Kong. The FSR and budget were passed by the Provincial Government during the second quarter of 2003, allowing the appointment of contractors for the Phase 1 construction to be started.
Early site preparation by CNOOC was underway in May 2003 with the cooperation of the Shenzen Planning Bureau, Land and Resources Bureau, Construction Bureau and the Logistics Department of Guangdong Military Zone. The Front End Engineering Design (FEED) contract was awarded to Halliburton KBR and JGC Corporation of Yokohama, Japan. The conceptual design was carried out by MW Kellogg Ltd in London, UK.
The STTS Group, a French / Italian joint venture comprising Saipem, Technigaz and the engineering companies Tecnimont and Sofregaz, was awarded the Engineering, Procurement, Construction (EPC) lump sum turnkey contract for the project. This contract is worth $240m with Saipem receiving a 60% share worth $145m.
The first phase of the project involves the construction of the LNG import terminal, two LNG storage tanks, regasification plant, the associated marine engineering works and a 300km trunkline system. The LNG terminal is being constructed at Ping Tou Jiao on the Dapeng Peninsula in Dapeng Bay. The trunkline is being constructed on the eastern side of the Pearl River delta to supply Pingshan, Dongguan, Guangzhou and Foshan.
The trunkline has two lateral branch pipelines to connect to two new gas fired power stations and three recently converted oil fired power stations in China. In addition there is a lateral pipeline to deliver LNG to a gas fired power station owned by Hong Kong Electric and Light Company and also to the Hong Kong and China Gas Corporation.
The second phase will see an increase in the capacity at the LNG terminal and the extension of the trunkline by a further 182km past Foshan to supply other cities in the Pearl River delta, including Zhuhai, Zhongshan, Jiangmen and Heshan.
The import capacity of the terminal will then be increased by a further two million tons of LNG a year to five million tons a year. It is expected that the LNG transmission system will also be also be able to accommodate a further 1.5 billion cubic metres of natural gas a year expected from reserves in the South China Sea. The second phase supply contract is still out to tender and was not due to be awarded until late 2006.
LIQUEFIED NATURAL GAS SUPPLY CONTRACT FOR THE FIRST PHASE
Bids were invited for the supply contract for the new LNG terminal in Guangdong province from September 2000 by the Provincial Government. The supply contract was awarded to North West Shelf Venture (NSW), an Australia-based consortium, in August 2002. The export deal is worth AU$25bn over the supply period which has been set at 25 years (3.3 million tons a year).
The consortium includes Woodside Energy Ltd (the operator), BHP Billiton (North West Shelf) Pty Ltd, Japan Australia LNG (MIMI) Pty Ltd and Shell Development (Australia) Pty Ltd. All members of the consortium hold an equal share of the concern. It is likely that CNOOC (oil and offshore gas producing unit) will seek to acquire a participating interest in the North West Shelf Venture.
The fulfilment of this supply contract will require NSW to construct additional processing trains and a second trunkline from the North Rankin A platform to shore in Western Australia.
There are three existing processing trains at the Karratha LNG liquefaction plant on the Burrup Peninsula, each with a capacity to produce 2.5 million tons a yar of LNG. A fourth is being constructed with a capacity of 4.2 million tons a year, which should come onstream in mid 2004. A fifth train is also now planned. The combination of the fourth and fifth trains will more than double the output of the Karratha plant.
NSW will ship the LNG in conjunction with two Chinese partners, COSCO and China Merchants. This will require three new LNG transport vessels. NSW currently has a fleet of eight vessels to serve existing customers with a ninth under construction by Daewoo of South Korea. The construction of three new LNG vessels will be commissioned in due course.