China National Offshore Oil Corp (CNOOC), the nation's largest offshore oil and gas producer, is well on the way to deploying a network of liquefied natural gas (LNG) terminals along the coastline.

The company, however, will have to fend off tough competition from rival China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec) who both crave breaking into the emerging lucrative business, and hope to rock the current CNOOC dominance.

Over the past weeks, CNOOC has reached co-operative outlines with local governments to build three LNG receiving terminals in Northeast China's Liaoning Province, East China's Jiangsu Province and Shantou in South China's Guangdong Province.

The projects require a total investment of 24.5 billion yuan (US$2.96 billion) to build three terminals in Yingkou in Liaoning, Binhai in Jiangsu and Shantou in Guangdong over the next six years.

The terminals will receive a total of 8.5 million tons of imported LNG a year, and turn it back into gas to supply local power and chemical plants as well as thousands of households.

If all three projects finally come to fruition, CNOOC will be able to build a LNG terminal chain on the coast line, nurturing the LNG business as a new cash cow.

At present, the company is building China's first two LNG projects in South China's Guangdong Province and East China's Fujian Province which have a combined capacity to process 6.3 million tons of LNG a year.

Its proposed terminal in Zhejiang Province is also approaching the final stages before its opening is scheduled. CNOOC is also stepping ahead in building another two facilities in Shanghai and Tianjin.

Still, CNOOC may suffer the bite as rival Sinopec and CNPC are jostling for the emerging LNG business.

Sinopec now is lobbying hard to build a similar terminal in Rudong in Jiangsu Province, according to an official with the national development and planning commission of Jiangsu Province.

Sinopec has brewed the plan for 10 years, and has submitted a proposal to the National Development Reform Commission for approval, said the official.

Sinopec's project may block CNOOC's plan in Jiangsu.

Meanwhile, Sinopec has virtually clinched a deal to build a terminal in Qingdao in Shandong Province. Once completed, the project will be able to handle up to 3 million tons of LNG annually.

Another rival, CNPC, is also catching up. It is planning to build a competing LNG terminal in Dalian in Liaoning.

A CNOOC official familiar with the situation said it would be of great advantage if the company can complete a LNG terminal chain along the coast line.

(China Daily October 27, 2004)