Sinopec will build a $10 billion liquefied natural gas terminal on an outlying island off Zhuhai after winning a contract to supply natural gas to Macau.
The move is a significant step for the company towards realising its ambitions to extend its business in the Pearl River Delta region.
Sinopec had offered to supply gas to Hong Kong using an undersea pipeline and was in talks with a number of potential buyers in the city, said Sinopec Gas Company president Gao Aihua. But CLP Power, which is proposing to build its own LNG terminal in Hong Kong, has rejected the offer, saying it fails to provide certainty of supply and to meet a 2011 timeframe.
Sinopec said the Zhuhai LNG terminal would be built on Huangmao Island, 13km south of Macau's Coloane Island and 40km west of Lantau.
The site was chosen after considering the potential demand from Hong Kong, Mr Gao said.
The terminal will be in operation by 2009 with a handling capacity of 2 million tonnes a year, which could be enough to satisfy the needs of Macau's gas-fired power plants. Capacity could be expanded to 5 million tonnes by 2011 and supply other areas in the delta region, including Hong Kong, said Mr Gao, without saying if the project had been endorsed by the central government.