5 years ago17 views
BP announced today that it has been selected to enter exclusive negotiations to secure the position as the foreign partner in the JV tasked to develop China's first liquefied natural gas (LNG) import terminal and associated pipeline. The Chinese sponsors and BP will jointly conduct a Feasibility Study which, once approved by Chinese authorities, will lead to the formation of a JV company responsible for the construction and initial operating phase of the new plant.
The Guangdong project in southern China will consist of an LNG re-gassification terminal near the city of Shenzhen, with a capacity of three million tonnes a year, together with 300 km of associated pipeline linking the terminal to the region in its first phase. It is due on stream in 2006.
A successful finalisation of the negotiations will lead to BP taking a 30% equity stake in the project, partnering with a coalition led by the China National Offshore Oil Corporation (CNOOC) (33%), local Guangdong companies (31%) and two Hong Kong energy companies (6%).
"This is a significant new step in expanding our China operations, and an excellent strategic fit with our Asia-Pacific gas reserves,” BP chief executive Sir John Browne said.
"The Guangdong project will cement our position as a leading global partner for China's rapidly growing gas markets and provides a platform for further growth for the BP Group in the province of Guangdong. China is the world's largest energy market outside the U.S. with a market expanding with continued economic deregulation. As China moves to cleaner fuels, gas demand will increase more rapidly still, and we now have the strongest possible access to the markets being created by that growth.”
BP's Phase one investment is estimated at some $180 million. An anticipated Phase two expansion is envisaged, to be on stream in 2008. This will add a further 2 million tonnes a year of LNG re-gassification capacity and 180 more kilometres of pipeline.
Gas currently meets just 2% of China's energy needs, but this number is projected to increase to between 7 and 8% by 2010.
BP is one of the world's largest energy and petrochemicals groups and has so far invested over U.S.$3 billion in China. To date, BP employs over 700 people in China and is involved in joint ventures that employ over 2,200. BP has a wide range of existing investment and business activities in China, working with the country's three major integrated oil companies.
In March 2000, BP acquired a 2.2% equity position in PetroChina, a major integrated oil and gas company, through its IPO. This was followed in September 2000 by a U.S. $400 million investment in Sinopec through its IPO. A framework joint venture agreement was signed by BP and PetroChina in August, 2000 as a first step aimed at jointly developing the gas market in the Shanghai region.