China Lacking LNG

China will have a hard time acquiring enough liquefied natural gas to feed its planned LNG terminals, according to a senior official with BP Plc, Mark Pilcher.

So far, Chinese companies have proposed building 16 LNG receiving terminals, with as many as 10 of these originally planned to be operational by 2010.

However, so far, only two terminals, the most advanced in construction terms, have secured long-term gas supplies, some of it from BP. These are Guangdong's Dapeng LNG and Fujian projects, which will start operations in June 2006 and at the end of 2007 using LNG from Australia's Northwest Shelf and Indonesia's Tangguh LNG, respectively.

BP, which operates the Tangguh project in Indonesia, will be supplying about 127 billion cubic feet of LNG to the Fujian terminal.

Right now, there is a shortage of LNG in Asia, and that's why prices are so high, Pilcher said. LNG prices in Asia mostly follow the trend in oil prices. So if oil prices go up, LNG prices will go up too