Mark Qiu, the company's chief financial officer, said Hong Kong will buy 1 million tons of LNG a year from the mainland's first LNG terminal in southern Guangdong Province to fuel the power plants and household consumption in the region.

Last week, CNOOC picked up ALNG (Australia LNG) to supply 3 million tons of LNG a year for 25 years to its Guangdong LNG terminal. The terminal, due to start operating in 2005, will handle the imported LNG back to natural gas to supply the province and neighboring regions.

"The market is big enough to accommodate the imported LNG," Qiu said. "One third of the production will be sold to Hong Kong, with the remaining two-thirds to Guangdong Province."

Qiu said up to 80 per cent of the imported LNG would be used for electricity generation.

But Qiu did not say how much LNG the terminal will sell to Hong Kong when its production expands to 5 million tons a year by 2008.

Energy-thirsty Hong Kong is able to channel the gas to the region partly because Hong Kong and China Gas Company, known as Town gas, and Hong Kong China Light and Power each holds 3 per cent in the US$600 million terminal.

With the rest of the shares of the terminal, CNOOC takes a controlling 33 per cent, local companies 31 per cent, and BP, which failed to win the supply contract, 30 per cent.

A Town gas spokeswoman said that one of the two Hong Kong companies, or both, will build a US$64.1 million gas pipeline under the sea to deliver the gas from the Shenzhen-based terminal.

She said her company would buy up to 500,000 tons of LNG a year from the terminal, most of which will be used for household consumption.

(China Daily August 13, 2002)