Three of the world's largest oil companies have been shortlisted to bid for China's first liquefied natural-gas (LNGP) project in Shenzhen. They are British-based BP Amoco, United States-based Exxon Mobil and the Anglo-Dutch concern Royal Dutch/Shell. The fourth shortlisted candidate is a consortium led by Australia's Woodside Petroleum group. Hong Kong utility CLP Holdings - a member of the Exxon consortium - is the only Hong Kong firm to make the second round of bidding. The winner is expected to be named when the second round is completed next month, according to the Guangdong government's Web site. The winning bidder will take a 30 per cent stake in the US$870 million project, which will include construction of a three-million- tonne natural gas-receiving terminal and truck LNG pipeline in its first phase. The project also includes upgrading some of the province's oil-fired power plants to gas-fired plants. The first phase is scheduled to be completed in 2005. The project is a key element in Beijing's drive to encourage the use of environmentally friendly natural gas to reduce pollution and diversify China's energy mix. Natural gas accounts for about 2 per cent of China's energy. The bidders group Exxon with CLP (the monopoly supplier of electricity to Kowloon, the New Territories and Lantau) and Chubu Electric; Shell with Marubeni Corp and Osaka Gas; and Woodside with Korea Gas and BHP. BP is bidding on its own. They were chosen from 10 groups that submitted bids in the initial selection process last month. The six that failed to make the next round were Enron, Iran National Petroleum, Sumitomo, Mitsubishi Corp and Malaysia's Petronas, TotalFina Elf and Gaz de France, and Cheung Kong Infrastructure and Japan's Itochu. The Guangdong government will choose one partner based on its proposal, expertise, terms of co-operation and financial strength. Prudential-Bache Securities utilities research head Alice Hui Suk-fong expects keen competition due to the size of three of the bidders. The Exxon group, which includes a fully integrated oil firm, and power company CLP have a long history of doing business in China. Ms Hui said their chances would be improved by their involvement with the Qianwan power project, in which they have a combined 35 per cent interest. The long-awaited Qianwan project, on which construction has yet to start, will buy natural gas from the LNG project. Mainland shareholders will own 64 per cent of the LNG project - leading sponsor China National Offshore Oil will hold 33 per cent, Shenzhen Investment Holdings 14 per cent, and Guangdong Investment 6 per cent. Guangzhou Gas, Dongguan Fuel Industrial and Foshan Municipal Gas will own 11 per cent. Hong Kong utilities Hongkong Electric and Hong Kong and China Gas have each secured a 3 per cent stake in the project by individually investing US$18 million.