CLP Group

Minister stresses benefits of gas pact

PUBLISHED : Saturday, 30 August, 2008, 12:00am
UPDATED : Saturday, 30 August, 2008, 12:00am

The environment minister sought to underline yesterday the benefits of the power-supply agreement sealed with the mainland.

Edward Yau Tang-wah said the 20-year agreement would boost the supply of natural gas to Hong Kong by at least a third when a pipeline carrying gas from Central Asia comes onstream around 2013.

He said the pipeline from its Shenzhen terminal to CLP Power's Black Point power station in Tuen Mun would be 16km long and would cost far less to build than the 38km pipeline required to transport gas from a terminal CLP has proposed building on the Soko Islands to import gas from overseas.

CLP has not commented on the agreement, but Mr Yau reiterated that it cast doubt on the company's plans for the HK$10 billion terminal.

'Here we get a new supply pipeline on our doorstep at marginal cost. Isn't it a great difference between that and a [supply] contract from abroad? So there will be a natural incentive for the parties to pursue that,' he said.

CLP said it needed to build the terminal because reserves in the Yacheng field off Hainan , from where it gets 2.5 billion cubic metres of gas a year, were far less than expected and would run out soon after 2011 at current rates of usage.

However, the pact agreed on Thursday guarantees another 20 years' supply from Yacheng, and CNOOC, the field's operator, says that with further drilling it can supply at least 2 billion cubic metres a year.

While the Sokos plan is now in doubt, Mr Yau said there was a window of opportunity for CLP Power and other power producers to take a stake in the Shenzhen terminal of the 4,800km pipeline bringing gas from Turkmenistan via Kazakhstan. A site in Dachan Bay is envisaged for the terminal, which will supply 1 billion cubic metres of gas a year.

Power suppliers use natural gas to generate electricity.

The pact also assures CLP of a further 20 years' supply of electricity from mainland nuclear plants.

Mr Yau said the extra gas would allow more electricity to generated from gas, improving air quality.

About 60 per cent of the city's electricity is produced from coal, 20 per cent from natural gas and the rest by nuclear plants over the border.

Mr Yau said it was a 'natural choice' for Hong Kong to opt for a gas supply that was robust and cheaper than under CLP's proposal.

As for the deal's impact on power tariffs, Mr Yau said while the new supply would ease pressure for them to rise, he believed the public was willing to pay more for natural gas in exchange for cleaner air.

Conservation group WWF Hong Kong called on the government to officially reject the Sokos plan and designate the islands a marine park.