China National Offshore Oil Corp (CNOOC), the country's largest offshore oil producer, signed a 25-year purchase agreement of liquefied natural gas (LNG) with Qatar on Monday.

According to the long-term agreement, CNOOC, operator of China's first LNG terminal, will buy 2 million tons of LNG per annum from Qatargas Operating Co, the company said in a statement.

The gas will be shipped to five LNG terminals in Guangdong, Fujian, and other coastal areas in China, using Q-Flex and Q-Max LNG carriers, the most sophisticated carriers in the world.

"Qatar is one of the world's leading LNG producers and exporters, and China is believed to have the most potential market for LNG, so the deal will benefit both sides, as well as boost the energy cooperation between two countries," said Fu Chengyu, chairman of CNOOC.

The two companies reached an initial agreement on the deal in April, during Qatari Prime Minister Sheikh Hamad bin Jassim bin Jabr al-Thani's visit to Beijing. China's priorities of energy security and sustainable development have boosted demand for clean and efficient energies. The country is seeking to increase the use of natural gas to 9 percent of the primary energy consumption by 2010 from the current 3 percent, which has in turn promoted the development of the LNG industry.

Operated by CNOOC, China's first LNG terminal in Guangdong province started operation in 2006. At present, the company is constructing LNG facilities in Shanghai, Futian in Fujian province and Ningbo in Zhejiang province, which will be put into use in 2009. It is estimated that the company will ship 60 million tons of LNG to China by 2020.

Earlier this month, CNOOC signed an agreement with Total Gas and Power Limited (TGP) to purchase up to 1 million tons of LNG annually starting from 2010.

The gas will be sourced from Total's global LNG portfolio, based on its participation in over 10 liquefaction projects worldwide, and on TGP's trading activities, said a Total China source on June 16.

PetroChina, the country's largest oil producer, also started construction of its first LNG terminal in Dalian, a port city in Liaoning province in April.

The project, with a total investment of more than 10 billion yuan, consists of a wharf, a receiving facility and transportation pipelines. It is designed to receive supplies from Qatar, Australia and other overseas markets.

(China Daily June 25, 2008)