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Shell hopes for deal to supply LNG
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Royal Dutch Shell Plc is hopeful that its plan with China’s Guanghui Energy Co to invest in an LNG import terminal in east China will facilitate its entry into the distribution business in the future.
While the project in Qidong, Jiangsu Province, still needs government approval, it creates opportunities for Shell to jointly distribute LNG in the China market, Huibert Vigeveno, chairman of Shell China, said in an interview in Shanghai.
The handling capacity of the proposed Qidong terminal will initially be 600,000 tons a year and rise to 1.15 million tons and 3 million tons in stages, Guanghui said.
Xinjiang-based Guanghui said last week that it signed a deal with Shell to invest in the LNG terminal in Qidong. The deal marks a rare cooperation on a multibillion-dollar investment between a global oil major and a private Chinese company in building the LNG terminal.
The Anglo-Dutch firm is already the largest LNG supplier to China among international energy majors as it is part of a consortium that supplies the super-chilled fuel from Australia to the country’s first terminal in Shenzhen, Guangdong Province, in 2006.
Shell also counts PetroChina and CNOOC as partners in LNG exploration and production projects overseas as well as customers in selling the fuel.
PetroChina is China’s largest gas importer but it sells the imported gas in the domestic market at a loss due to price regulation. The government in July announced a price reform to bring prices closer to international levels but some analysts said the reform has been proceeding slower than expected, judging from PetroChina’s third-quarter earnings.
Still, Vigeveno said the Chinese government is moving in the right direction. “Looking at global supply and demand and the need for natural gas in China, I think it’s a very welcome step,” he said.
Shell also opened its newly expanded lubricant plant in Zhapu, Zhejiang Province, yesterday to meet demand from customers in central China.
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