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China to Buy LNG from Malaysia

The Chinese government is considering ratification of a 25-year agreement on buying liquefied natural gas

The Chinese government is considering ratification of a 25-year agreement for one of China's big three companies to buy liquefied natural gas from Malaysian state energy corporationPetronas.

The Xinhua-run China Securities Journal reported the news on Thursday quoting a China National Offshore Oil Corporation (CNOOC) spokesman.

Designed to receive six million tons of LNG annually, China's third LNG terminal in Shanghai is being built in two phases. The first will be completed in 2008 when it will be able to process three million tons of LNG and supply four billion cubic meters natural gas annually to Shanghai Municipality.

The Shenergy Group, a state-owned energy company based in Shanghai, holds a 55-percent stake in the project, while CNOOC, China's largest offshore oil company, holds the other 45 percent.

The CNOOC spokesman said the Supply Purchase Agreement (SPA), the final agreement for LNG supply, had not yet been signed as prices from other suppliers were still being considered.

The acceptable price range was five to six U.S. dollars per MMBtu, the report quoted industry insiders as saying.