Fujian receives first LNG supply

The first shipment of liquefied natural gas (LNG) was transported to Fujian from Indonesian Togguh Gas on July 26, symbolizing a 25-year-long supply and purchase cooperation between the two sides.

The shipment, carried by the first domestically constructed Min Rong LNG Ship, arrived at Fujian LNG Terminal at Xiuyu Port, Putian. It will be partly used to gas power plants in Putian, Jinjiang and Xiamen through trunk-lines and used to generate power after vaporization. The remainder will be put into daily use in Fuzhou, Putian, Quanzhou, Xiamen and Zhangzhou, local officials announced.

"Natural gas is cleaner, safer and more efficient and also the most suitable gas resource for pipeline gas. Through vaporization, it will be transported to five central costal cities in Fujian. Currently, over 100 million pipeline gas users in Fujian have turned to natural gas," according to local officials.

Natural gas has less of a burden on the environment than oil and coal due to its colorless, odorless, non-toxic and non-corrosive features. The installed power generating capacity of three gas power plants in Fujian reaches 3,500,000 kW and the annual output of generated electricity comes to 14 billion kWh, enabling stronger electric peak-shaving capacity, pushing energy conservation and environmental protection and optimizing Fujian's energy structure.

According to Zhang Hao, CEO of Fujian LNG, LNG will largely help tackle Fujian's energy and environmental issues. Furthermore, clean energy like LNG, to a large extent, is very attractive to international enterprises. Many international companies value environmental protection when choosing investment places, which has implications on stock prices and initial costs.

The first construction stage of the Fujian LNG project received 2,600,000 tons of LNG. The newly added No 3 and No 4 storage tanks will be put into service in 2011, doubling Fujian LNG's receiving capacity to 5,200,000 tons. The second stage of the project has been initiated and by 2020, a gas distributing system covering the West Bank will be completed.

"Market sentiment on the Hummer has turned more positive lately as industry insiders and media come back to their senses from the initial shock," said Chen Qiaoning, an analyst with ABN AMRO TEDA Fund Management.

"It seems to me that the Chinese government has little to lose giving the greenlight. Tengzhong is a privately-owned company and the Hummer deal won't cost any state money," Chen said.

Tengzhong still expects the deal to be completed in the third quarter this year, which media reports have priced at between $150 million to $200 million, much less than the $500 million that GM had sought last year.

Chinese chemical maker Lumena Resources, which shares the same home base with Tengzhong in Sichuan province, had said its chairman Suo Lang Duo Ji, also known as Li Yan, may participate in the proposed bid for Hummer.

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