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Delayed Sinopec Liquefied Natural Gas Terminal Opens in Tianjin

By Luo Guoping, Huang Kaixi and Coco Feng
A new Sinopec port terminal in Tianjin receives its first shipment of liquefied natural gas on Tuesday. The terminal was supposed to be open by the end of 2016, but work wasn't completed until May. Photo: VCG
A new Sinopec port terminal in Tianjin receives its first shipment of liquefied natural gas on Tuesday. The terminal was supposed to be open by the end of 2016, but work wasn't completed until May. Photo: VCG

A newly opened terminal in the northern coastal city of Tianjin received its first shipment of liquefied natural gas (LNG) this week after a year of delays, and comes at a time of badly needed energy in China’s north.

The terminal, operated by the state-owned China Petrochemical Corp. (Sinopec), received the shipment from Australia on Tuesday, Sinopec said in a statement.

The terminal, located in a port in southern Tianjin, has a capacity to receive 3 million tons of LNG per year, and can supply Beijing, Tianjin, and provinces that include Hebei, Shandong and Henan, according to Sinopec. Officials hope it can help alleviate the shortage of heating fuel that has left residents in parts of northern China shivering.

Sinopec said it will expand the facility’s capacity to 10 million tons per year. Once expanded, the terminal will involve a total investment of 13.6 billion yuan ($2.17 billion).

The acute natural gas shortage this winter was partly the result of authorities pushing forward a program to replace coal-fueled heating systems with natural gas and electricity-powered systems, with a focus on both residences and industrial buildings across smoggy northern China. Authorities in Hebei had warned of a natural gas shortage of 10% to 20% starting Nov. 28.

The Sinopec terminal was supposed to open by the end of 2016, but construction wasn’t completed until May due to the complexity of the work, as well as administrative issues regarding demolition and compensation for previous property owners.

In addition, a pair of underwater oil and gas pipelines, owned by the state-owned China National Offshore Oil Corp. (CNOOC), had blocked the shipping route. Some parts of those pipelines were only 6.5 meters (21.3 feet) deep, whereas some large LNG ships have a hull draft of over 11 meters.

During the height of the natural gas shortage, authorities made an emergency exception to allow CNOOC to use a new set of pipelines — an approval that hadn’t been given because the lines crossed marine conservation areas. The old pair was demolished by mid-January.

CNOOC runs an existing LNG terminal in Tianjin.

The Sinopec terminal in Tianjin is the company’s third LNG import project, after it launched one in Qingdao, Shandong province, and another in Beihai, in the Guangxi autonomous region. The three currently have a combined capacity to receive 9 million tons of LNG per year.

Sinopec is building additional terminals in Jiangsu and Zhejiang provinces, both in East China.

Altogether, China’s LNG terminals now have a total capacity of 61 million tons per year.

Contact reporter Coco Feng (renkefeng@caixin.com)

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