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Written by: Staff

SINGAPORE, Mar 3 (Reuters) China is expected to receive its first shipment of liquefied natural gas (LNG) from Australia around the end of May, a delay of nearly two months from an earlier schedule, a spokesperson for the project said on Friday.

But the 3.7 million-tonne-per-year (tpy) receiving terminal, phase one of China's first LNG project in southern Guangdong province, is on track for completion around June, said Liang Ming of Guangdong Dapeng LNG Company Ltd, a joint-venture between China National Offshore Oil Corp. (CNOOC) and BP Plc.

''The arrival of the first cargo has been readjusted,'' said Liang, without giving a reason for the delay.

China planned a string of import terminals on its eastern seaboard to boost use of the clean fuel, but so far the Guangdong project is the only one that has concluded a gas supply deal.

In late 2004, the project finalised a 25-year, $19 billion deal to buy gas from Australia's North West Shelf project at around $3 per million British thermal unit (MMBTU).

LNG prices have since surged on tightened supply and soaring oil prices, forcing China to quietly push back plans on several terminal projects.

The Dapeng official said the project targeted power plants to use 65 percent of the imported gas under phase one and the remaining 35 percent was slated for town gas customers.

Town gas users include those in the cities of Shenzhen, Dongguan, Guangzhou and Fushan in Guangdong province, China's manufacturing hub. Gas will also be piped to neighbouring Hong Kong.

Beijing has yet to introduce tariff and tax incentives to encourage power plants to use gas, replacing cheaper and dirty coal, which fuels three quarters of China's power generation, industry experts said.

Oil traders have expected that the start-up of the new Guangdong terminal would cut into use of fuel oil, a heavy refined product burned by small power plants in the province. China is Asia's largest fuel oil imports.


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