Shanghai on Monday launched a major energy supply project to transport liquefied natural gas (LNG) from Malaysia to the east China economic hub over the next 25 years.

 

Construction began on Monday on the first phase of the Shanghai LNG project, set to go into operation in 2009, Shanghai Mayor Han Zheng announced on Monday.

 

Shanghai LNG Co. Ltd. reached a deal with a subsidiary of Petronas, Malaysia's national petroleum corporation, on July 31, under which the terminal will receive LNG from Malaysia from 2009. The project was approved by the National Development and Reform Commission in December.

 

The annual supply should stand at 1.1 million tons in the first three years, rising to 3 million tons from 2012.

 

The Shanghai terminal will be located in the Yangshan deep-water port, an international shipping center in Shengsi County in neighboring Zhejiang Province, at the mouth of the Yangtze River, located around 45 km from the Pudong International Airport.

 

The first phase will see a total investment of 7 billion yuan (US$900 million) and include three 165,000-ton concrete tanks as well as a dock that can anchor ships from 80,000 to 200,000 cubic meters.

 

Sources with the Shanghai LNG Co. Ltd. said the second phase of the project would increase import capacity by another 3 million tons a year, but no detailed timetable was available.

 

The project, along with China's west-to-east gas pipeline and the East China Sea gas project, will help meet Shanghai's rising energy demands while improving energy efficiency and slashing emissions, said a spokesman with the National Development and Reform Commission.

 

The deal is the largest trade contract between China and Malaysia.

 

Petronas draws its natural gas supplies from the Bintulu region, one of the world's largest LNG production bases in eastern Malaysia. It boasts an annual output of 23 million tons and supplies mainly to countries like Japan and the Republic of Korea.

 

(Xinhua News Agency January 23, 2007)