BP Amoco confirms role in pioneer US$600m Shenzhen project
BP Amoco yesterday confirmed it had been picked as the foreign partner in China's first liquefied natural gas (LNG) terminal.
The US$600 million LNG project involves building a terminal in Shenzhen capable of re-gassification of three million tonnes of imported LNG a year.
The first phase, due on stream in 2006, also requires 300 kilometres of associated pipelines built to supply gas to the booming Guangdong region.
The British-based oil giant will have a 30 per cent stake in the terminal.
Mainland shareholders, led by oil giant China National Offshore Oil Corp with a 33 per cent stake, take a combined 64 per cent.
Two utilities from Hong Kong have the remaining 6 per cent holding.
BP chief executive Sir John Browne said the project would cement his company's position in China, where it had so far invested US$3 billion.
'As China moves to cleaner fuels, gas demand will increase more rapidly still, and we have the strongest possible access to the markets being created by that growth,' he said.
BP's first phase investment is estimated at about US$180 million.
An anticipated second phase, expected to come on stream in 2008, will add a further two million tonnes a year of capacity and another 180 km of pipelines.
The Shenzhen project is aimed to meet rising fuel demand in southern China while reducing its reliance on coal.
Coal accounts for 70 per cent of the country's energy consumption.
With economic growth projected to average 7 per cent a year in the next five years, China's demand for energy is projected to rise 6 per cent a year - outpacing developed countries.
The importance of natural gas to this growth is growing by the day.
BP expects natural gas to account for between 7 per cent and 8 per cent of the country's energy needs in 10 years, up from just 2 per cent at the present.
BP's participation in the project also increases competition in the world's third-largest petroleum market and the one which is probably recording the highest growth.
In October, Royal Dutch/Shell said it had been granted approval to build a US$4 billion petrochemical joint venture in Huizhou city, Guangdong.