China Opens Bidding for Guangdong LNG Supply Contract |
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China Thursday opened international bidding for the supply contract of the country's first liquefied natural gas (LNG) project in Shenzhen of Guangdong Province.
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China Thursday opened international bidding for the supply contract of the country's first liquefied natural gas (LNG) project in Shenzhen of Guangdong Province.
Carried out by the Joint Executive Office of the Guangdong LNG Terminal & Trunkline Project, the bidding invited seven potential suppliers from Australia, Indonesia, Iran, Malaysia, Qatar, Russia and Yemen. They will compete to supply 3 million tons of LNG to Guangdong annually for at least 20 years.
According to the Joint Executive Office, the bid selection will be executed in two phases. First, the office will shortlist at least two of the seven bidders. Then the office will enter into detailed contract negotiations with the finalists and choose the supplier. The result is subject to approval of the Chinese government.
Xu Dingming, Inspector of the Industry Development Department of the State Development Planning Commission, said the most important goal is to achieve a reliable LNG supply source that offers competitive gas prices.
Industrial analysts agree that the competition is going to be an intense one and the winner will have to offer competitive gas prices, contract flexibility and various cooperation opportunities for the Chinese partners.
The LNG terminal and pipeline project was endorsed by the Chinese government in 1998. With an annual handling capacity of 3 million tons, the terminal will be situated in Shenzhen and the 400-kilometer gas grid will sprawl across the Pearl River Delta. The imported gas will first fuel households in Shenzhen, Foshan, Guangzhou and Dongguan and two gas-fired power plants in Shenzhen.
The LNG terminal and pipeline project will cost around 5 billion yuan (about 600 million U.S. dollars). The Chinese side takes up a majority share of 70 percent with the rest going to BP, which was chosen as the foreign partner in March.
At the moment, the project's feasibility study is still underway and is scheduled for completion before June 2002. The Chinese owner hopes that the construction will kick off in the latter half of 2002 and wind up by the end of 2005.
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