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AFX Europe (Focus): Shell looks to supply LNG to Chinese oil firms: “Royal Dutch/Shell Group said it wants to supply liquefied natural gas (LNG) to China's oil majors in an effort to secure a share of the country's growing and lucrative market.” (ShellNews.net) 21 March 05

 

Mar 21, 2005

 

BEIJING (AFX) - Royal Dutch/Shell Group said it wants to supply liquefied natural gas (LNG) to China's oil majors in an effort to secure a share of the country's growing and lucrative market.

 

A Shell official told XFN-Asia that the Anglo-Dutch firm is negotiating with its Chinese counterparts to supply LNG for a number of projects, but declined to name any potential partners as "talks are in an early stage with nothing substantial on the table yet".

 

Sources said the mainland oil firms being courted by Shell include China's dominant offshore player China National Offshore Oil Corp (CNOOC), top oil producer China National Petroleum Corp (CNPC) and Asia's largest refiner China Petroleum & Chemical Corp (Sinopec).

 

In order to reduce sulphur dioxide emissions from thermal power plants, China is increasingly turning to clean energy such as LNG, and has vowed to boost the country's gas-fired generating capacity to 10 pct of overall capacity by 2020, up from the current level of 2.8 pct.

 

CNOOC is considered the front runner in the race for the nascent LNG business, and has landed LNG projects in wealthy regions including Guangdong province as well as Fujian province in the south and Shanghai in the east.

 

The company is also lobbying governments in the northeastern province of Liaoning and eastern China's Jiangsu province for new contracts.

 

Its domestic rivals are not far behind. CNPC had agreed to build LNG terminals in Jiangsu, Liaoning and the northern province of Hebei. Sinopec has secured a contract in the eastern province of Shandong.

 

Competition is also increasing among foreign oil giants.

 

BP Global Investments controls a 30 pct interest in CNOOC's LNG project in Guangdong. In addition, the British oil firm's 7.2 pct-owned Tangguh LNG gas field in Indonesia won a contract earlier to supply LNG to CNOOC's Fujian LNG terminal for at least 25 years.

 

Gas producers from Qatar and Australia are also believed to be interested in the China market, and industry analysts expect to see competition among multinationals to intensify further now that Shell is in the game.

 

yan.fang@xinhuafinance.com

 

fy/jpb/wk

 

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