China Prepares for First Delivery to Floating LNG Terminal

As the winter months approach energy demand is set to rise in China, and unfortunately, despite the huge investments in energy production, there will likely be a shortage of liquid fuels.

Just in time to help alleviate this problem, Chinese media has announced that the country’s first floating liquefied natural gas (LNG) import terminal should be completed and operational, ready to receive its first deliveries next month.

The Beijing Daily reported that “construction of China's first floating LNG terminal is coming to an end ... It will be ready to supply clean energy to Tianjin city next month.”

Beijing, aware that it could face fuel shortages (especially natural gas), has been urging China’s energy companies to boost to the boost the volume of gas that they supply to the economy. It has suggested companies should maximise the production potential at domestic gas fields, raise their imports from foreign sources, and prioritise the gas that they do have to send to the public transportation and residential sectors in order to ensure that demand is met amongst the Chinese population over the winter. Such actions will likely mean that the Chinese petrochemical plants will run at lower capacity.

Related article: Russia Opens LNG Floodgates

In August, CNOOC achieved the final nod of approval from the government to build the first ever floating LNG plant in the northern part of Tianjin.

The floating structure will cost 3.3 billion yuan (about $539 million) and be part of the first phase of CNOOC’s LNG project, and will have the capacity to receive 2.2 million tonnes of LNG a year, or 3 billion cubic metres. The second phase of the project will see the construction of a conventional onshore LNG terminal that will offer a total capacity of 6 million tonnes a year.

Last month CNOOC took charge of its first cargo of LNG from Qatar; delivered to its new 3.5 million tonne a year import terminal in Zhuhai, Guangdong. The Zhuhai terminal boosts CNOOC’s total LNG import handling capacity to 21.3 million tonnes a year.

PetroChina is trying to answer Beijing’s call by rooting out new LNG import contracts around the world, and Sinopec has vowed to cut deliveries to its refinery and chemical plant in order to divert more volume to residential users.

By. Joao Peixe of Oilprice.com