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Shanghai launches LNG project with Malaysia

(Xinhua)
Updated: 2007-01-23 13:54

Shanghaion Monday launched a major energy supply project that will transmit liquefied natural gas (LNG) from Malaysia to the east China economic hub over 25 years.

Construction started on Monday on the first phase of the Shanghai LNG project, which would become operational in 2009, Shanghai Mayor Han Zheng announced on Monday.

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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 byNational Development and Reform Commissionin December.

The annual supply will be around 1.1 million tons in the first three years and rise 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 neighboringZhejiangProvince, at the mouth of the Yangtze River, about 45 km from the Pudong International Airport.

The first phase involves a total investment of 7 billion yuan (900 million U.S. dollars) and includes three 165,000-ton concrete tanks and 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 was designed to 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, is expected to help meet Shanghai's energy demands, improve energy efficiency and cut emissions, said a spokesman with the National Development and Reform Commission.

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

Petronas company 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.