CNOOC denies seeking cut in LNG imports
(Shenzhen Daily/Agencies)
Updated: 2005-12-19 13:42

China National Offshore Oil Corp. (CNOOC) has denied it plans to cut liquefied natural gas (LNG) imports from Indonesia's BP-led Tangguh project for its Fujian terminal, the company's spokesman said Friday.

Indonesia's oil minister said Thursday that the Fujian terminal wanted only 1 million tons of LNG a year in the short term instead of the 2.6 million tons it had agreed to buy.

"Negotiations on the resources contract with Indonesia have basically been completed. The contract will be signed in the near-term, probably very soon," CNOOC's Liu Junshan said.

"There is no change in either volume or price of the LNG," Liu added.

The 5.5 billion yuan (US$682 million) Fujian LNG project, China's second after Guangdong, is due to come on stream in 2007.

The multi-billion dollar Tangguh project in the Indonesian province of Papua, operated by energy titan BP Plc., has secured contracts to supply 2.6 million tons per year to China over 25 years, 3.7 million tons per year to the U.S. West Coast via Mexico, and 1.1 million tons per year to South Korea.

CNOOC, parent of Hong Kong-listed CNOOC Ltd., is the leader in China's nascent LNG market, building a string of terminals to receive imported LNG along its coast, including Fujian.

It has a deal to purchase LNG from Australia's North West Shelf for its Guangdong terminal, but disagreements over pricing have scuppered moves by its unit CNOOC Ltd. to buy LNG from Chevron's Gorgon project in Australia.

China aims to expand the proportion of energy it gets from gas to 8 percent by 2010 from 3 percent now, as it strives to clean skies polluted by coal-burning plants.

But analysts say the enthusiasm over LNG is fading in the face of rising prices. Spot LNG has traded at record-highs this year as benchmark prices in the United States and the U.K. jumped above US$15 per million British thermal units (mmBtu). Long-term LNG contracts can be as low as US$2 to US$4 per mmBtu.