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Asian Petroleum Review : Jan-March 2011
Though more pricey than piped gas, trucked LNG costs a third less than diesel, which is in scarce supply in some parts of the country, with prices at a record above 8,000 yuan per tonne. In a shift of policy, the National Energy Admini- stration is drafting technical standards for LNG filling stations in a push to use LNG in vehicles and ships, a development industry players said was prompted by rapid growth in end-user de- mand. BIG GUYS ON BOARD As recently as 2008, powerful state energy firms were drawn into the booming niche business that they found fitted nicely into their broader green strategy, swiftly expanding into LNG re- tailing starting in the booming south, while add- ing smaller receiving terminals along the coast to allow for more flexible spot imports of the fuel. CNPC, parent of PetroChina, in 2008 turned its subsidiary Kunlun Energy Co Ltd into an LNG specialist that covers receiving facilities to distri- bution to retailing, industry officials said. The firm, which has taken over control of Petro- China's first two major coastal LNG terminals, is also quietly planning half a dozen mini termi- nals of 300,000 tonne per annum size within the next couple of years, a development likely to spur more spot imports of LNG. The growth in the sector could help absorb global oversupply after a rise in output of unconventional gas took the United States out of the market as an im- porter. "That is going to divert Middle Eastern supplies earlier earmarked for the U.S. , and China is an obvious destination, " said Yan Kefeng of Cam- bridge Energy Research Associates. THOUSANDS OF LNG STATIONS In 2009 Kunlun built 65 filling stations in 18 provinces, boosting gas supplies by one billion cubic metres a year. CNPC has partnered with local firms to become the operator of at least five inland liquefaction plants, with its largest plant in Ansai in the northern Shaanxi province to liquefy 500,000 tonnes per year slated to begin operations at the end of 2011. CNOOC, parent of CNOOC Ltd , a leading inves- tor in big import terminals, set up an LNG re- tailing department under its gas and power group, having built dozens of filling stations in manufacturing hub Guangdong in the south and looking to build more in the eastern and north- ern part of the country. Developers are targeting thousands of vessels cruising Chinese rivers, lorries that transport coal and trawlers like Liang's. Engineering firm Shenghui, a joint venture with Norwegian oil services firm I.M. Skaugen alone has been approached to work on more than 2,000 filling stations in the next three years, though experts warned the industry would first need to overcome technical and policy hurdles as it scales up. "It would perhaps take three years to solve the technical problems - - to revamp ship engines and truck engines, " said Shenghui's manager Ye, adding that there is still no national safety standard for LNG use in transport or a rule to allow LNG vessels to cruise along the main Yangtze river. But users such as fisherman Li- ang are eager to cut oil bills. "My boat gobbles up over three barrels of diesel, that is almost 5,000 yuan a day at current prices. It's not every day I can catch fish worth that much, " said Liang from his home at Zhou- shan, a main fishing zone off east China. (Editing by Clarence Fernandez)