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Shell signs letter of intent for Chinese LNG terminal

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BEIJING, June 13 | Thu Jun 13, 2013 7:01am EDT

(Reuters) – Royal Dutch Shell has signed a letter of intent with a private Chinese energy firm to build a liquefied natural gas (LNG) import terminal in east China, a Shell China official said on Thursday.

The pact, though non-binding, marks a rare cooperation on a potentially multibillion-dollar investment between a global energy company and a local private firm in China’s state-dominated energy sector.

“Shell and Guanghui Energy have signed a non-binding Letter of Intent that confirms the intention of the two parties to explore the possibility of developing a LNG import terminal project in Qidong, Jiangsu province,” Chen Xiaoni, a spokeswoman for Shell Companies China, wrote in an email.

Shanghai-listed Guanghui Energy plans to build LNG facilities in Qidong, Jiangsu province, starting with a 600,000 tonnes per year (tpy) storage and transit plant, according to a company statement released early this month.

The company aims to then build a 1.5 million tpy LNG import facility under a second phase and a 3.5 million tpy import terminal in a third stage. All these investments are pending regulatory approvals.

Shell, already a major LNG supplier to China, the world’s top energy user, would want to jointly invest and operate the facilities from the second phase, and the companies would explore the possibility of setting up a joint venture which would be controlled by the Chinese party, Guanghui said.

China operates five terminals along its east coast to import the super-chilled natural gas, after the first one started in 2006, and is adding and planning another dozen such facilities to meet rapidly growing demand for the fuel.

(Reporting by Chen Aizhu; Editing by Mark Potter)

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