The Guangdong LNG Project is China's first liquefied natural gas (LNG) import scheme.

The scheme will involve the construction of a 5 million tons per annum LNG import terminal, a trunkline system, gas fired power stations and gas distribution systems to towns and cities in the Pearl River delta. Construction will be in two phases, the first will be due for completion in 2005 and the second in 2008. Approval by the State Development and Planning Commission (SDPC) for phase one was granted at the end 1999.

PHASE 1
The first phase of the project involves construction of the LNG import terminal and a trunkline system. This will coincide with the construction of two new gas-fired power stations and the conversion to gas of three existing oil-fired power stations.There will also be a pipeline to transmit gas to Hong Kong's China Gas Corporation and a gas-powered power plant recently built by the Hong Kong Electric and Light Co., Ltd. After completion of the $620 million terminal and trunkline system, the terminal will have the capacity to import 3 million tons of LNG per annum (about 4 billion cubic meters of natural gas) when brought into operation in 2005. The LNG import terminal is to be built at Ping Tou Jiao, on the Dapeng Peninsula in Dapeng Bay, Shenzhen. The trunk line for the first phase will be laid to Pingshan, Dongguan, Guangzhou and Foshan. The total length will be 215.4 kilometres and will include the two branch lines to link the two new power stations.

PHASE 2
The second phase of the project will increase terminal capacity and extend the trunkline by 182 kilometres to Foshan, in order to supply gas to other cities in the Pearl River Delta, notably Zhuhai, Zhongshan, Jiangmen, Heshan and Foshan. The second phase will require a further investment of $250 million, and when completed in 2008 will increase import capacity by a further 2 million tons of LNG (2.7 billion cubic meters of natural gas). By that time, annual carrying capacity of the transmission system will have reached 8.2 billion cubic meters, boosted by a further 1.5 billion cubic meters of gas expected from the South China Sea.

The LNG terminal and trunkline for the Guangdong LNG Project will be a Sino-foreign joint venture. CNOOC will hold a 33% share in the venture and a further 31% share will be held by a Guangdong 'consortium' of companies consisting of: the Shenzhen Investment Holding Corporation, Guangdong Electric Power Holding Company, Guangzhou Gas Company, Dongguan Fuel Industrial General Company and Foshan Municipal Gas General Company. The Hong Kong Electric and Light Company and the Hong Kong Gas Corporation will each hold 3% respectively. BP Amoco will hold a 30 percent stake in the project. CNOOC is the lead partner on behalf of the Chinese companies.

A Joint Executive Office (JEO) to conduct the Feasibility Study for the Project will be established. In compliance with SDPC principles, the JEO will competitively select LNG supply and shipping arrangements, and finalize HOAs for LNG supply, shipping and gas sales contracts. After approval by the relevant government authorities, a joint venture company will be set up to carry out the construction and operation of the Project.

China called for bids for the construction of the terminal project near the southern boom town of Shenzhen on Aug 8, 2000. A decision on the 20-year LNG supply contract is anticipated by early 2001. BP, the Royal Dutch/Shell Group, Exxon-Mobil, Total-Fina- Elf and the Enron Corporation have all expressed interest in preparing bids for the $10 billion LNG import supply contract.