May 25, 2020 [Argus Media] – State-owned China Oil and Gas Pipeline Network (PipeChina) has broken ground on a LNG import terminal project in Longkou city in east China’s Shandong province, its first infrastructure project since it was set up late last year.

The terminal is expected to receive imports of around 20mn t/yr of LNG and supply around 28 billion m³/yr of gas, PipeChina said without providing a timeline. But it expects the first phase of operations to start in 2023.

PipeChina sees the project providing continuous, stable and clean natural gas for regions around the Bohai Sea by enhancing the capacity of peak shaving, emergency storage and winter supply of natural gas. It also expects the project to help reduce carbon dioxide emissions by 32mn t/yr.

The country’s main LNG importer state-controlled CNOOC was developing the Longkou terminal with domestic private-sector firm Nanshan Group, with the first phase of imports at 5mn t/yr. But CNOOC signed a deal in April to transfer management rights for its oil and gas infrastructure projects to PipeChina. It did not disclose at the time which projects would be involved.

Fellow state-controlled firm PetroChina and Sinopec are expected to inject assets into the national pipeline firm, whose creation is seen as further liberalising China’s oil and gas transmission system and making its oil and gas markets more transparent, liquid and competitive.

PetroChina, Sinopec and private firm Poly-GCL are also planning to add more LNG import capacity in Shandong with the expectation of increased demand in the province and neighbouring cities in east and north China.

Sinopec’s 3mn t/yr Qingdao LNG is currently the only import terminal in Shandong.

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