CHINA’S FIRST LNG PROJECT SIGNS MILESTONE AGREEMENTS FOR GAS SALES, FINANCING AND CONSTRUCTION, BP Holdings Barcelona

http://www.bp.com/genericarticle.do?categoryId=2012968&contentId=2018144

Guangdong Dapeng LNG Company Ltd today signed a series of agreements which underpin the commercial and operational success of China’s first liquefied natural gas (LNG) terminal and trunkline project which is due on stream in 2006.

BP, with a 30 per cent interest, is the sole foreign participant in the project. When completed, the project will supply imported gas from the North West Shelf project, Australia – where BP is also a partner – to Chinese customers in the Pearl River Delta area, Guangdong Province and Hong Kong.

The signings, which were attended by Vice Premier Zeng Peiyan in the Great Hall of the People in Beijing, involved:

Gas sales contracts, each for a twenty-five year term, with ten Chinese power generation and city gas companies. This will involve the supply of a total of 3.2 million tonnes a year of natural gas produced by re-gasifying imported LNG.

A Non-Recourse Project Financing Agreement of RMB 5,200 million (approximately US $665 million) for the terminal and trunk line with Industrial and Commercial Bank of China, Agricultural Bank of China and China Construction Bank, China Development Bank, and Bank of China.

An engineering, procurement and construction (EPC) contract executed with STTS – a French-Italian consortium. This contact provides for the construction of the LNG reception facilities that will receive, store and re-gasify LNG from the North West Shelf Joint Venture;

LNG Vessel Time Charter Party arrangements with Yuepeng LNG Shipping Company Ltd and Yuegang LNG Shipping Company Ltd, respectively for the chartering of up to three LNG vessels for the transportation of LNG to the Guangdong LNG terminal. It is envisaged that the LNG vessels will be built by Hudong Zhonghua Shipbuilding (Group) Ltd in Shanghai.

Anne Quinn, BP’s group vice president for Gas, Power & Renewables, said:

“The commercial contracts that are critical to the project have now been completed. They represent the consolidation of the relations between Guangdong Dapeng LNG Company and all its customers and partners and are the result of a magnificent effort by all the sponsors of the project over the last two years.

“BP is confident that, with CNOOC and our other partners, we will build a successful, world class LNG project, which sets the path for other similar projects in China, to bring clean and highly efficient energy to fuel the country’s continuing growth.”

The Guangdong LNG Terminal and Trunkline Project is located near Dapeng village, east of Shenzhen, in Guangdong Province. It will have an initial capacity of 3.7 million tonnes a year and 370 kilometres of trunklines stretching from Shenzhen through to Dongguan, Guangzhou, Foshan and Zhujiang to supply natural gas to city gas and power plants in Guangdong and Hong Kong.

Notes to editors:

The shareholders of Guangdong Dapeng LNG Company Ltd are: CNOOC Gas & Power Ltd. (a wholly-owned subsidiary of China National Offshore Oil Corporation) – 33 per cent; Guangdong Investments Limited and Pearl River Delta Investments Limited (both wholly-owned subsidiaries of BP Global Investments Limited) – 30 per cent; Shenzhen Gas Corporation Ltd. – 10 per cent; Guangdong Yudean Group Co., Ltd. – 6 per cent; Guangzhou Gas Company – 6 per cent; Shenzhen Energy Group Company Ltd. – 4 per cent; Dongguan Fuel Industrial General Company – 2.5 per cent; Foshan Municipal Gas General Company – 2.5 per cent; Hongkong Electric (Natural Gas) Limited (a wholly-owned subsidiary of Hong Kong Electric Holdings Limited) – 3 per cent; and Hong Kong & China Gas Investment Limited (a wholly-owned subsidiary of The Hongkong & China Gas Company Limited) – 3 per cent.

The Project will procure 3.32 million tonnes per annum of LNG from the North West Shelf Joint Venture under a 25-year LNG Sales and Purchase Agreement and distribute gas to power plant and city gas off-takers.

The power plant gas purchasers include Huizhou power plant, Qianwan power plant, Zhujiang power plant, Meishi power plant and a Hongkong Electric Company power plant in Hong Kong. City gas off-takers include Shenzhen Gas Corporation Limited, Guangzhou Gas Company, Dongguan Fuel Industrial General Company, Foshan/Nanhai Gas Company, and a town gas project of The Hongkong and China Gas Company.

The Non-Recourse Project Financing comprises an 18-year RMB term loan facility of RMB 2,812 million, a 15-year US$ term loan facility of US $219 million, and a RMB/US$ working capital facility of RMB 585 million. Industrial and Commercial Bank of China, as co-ordinating senior lead arranger, provided 30 per cent of the total financing; Agricultural Bank of China and China Construction Bank, as senior lead arrangers, provided 25 per cent each; China Development Bank, as lead arranger, provided 10 per cent, with the remaining 10 per cent financed by Bank of China. The financial advisor is ABN AMRO Bank.

STTS is a French-Italian consortium comprising of Saipem S.A., Technigaz, Technimont and Sofregas. It is anticipated that the LNG terminal will commence commercial operation in June 2006.

BP is one of the world’s largest suppliers of gas to liquefaction plants for LNG production. It expects to grow this supply to more than 1.5 billion cubic feet a day by 2005, resulting in an average growth rate of around 15 per cent a year and a global market share of around 8 per cent.

BP is currently involved in four major liquefaction plants, which together account for over 30 per cent of 2001 global LNG sales. BP is the largest shareholder in Atlantic LNG in Trinidad; a shareholder and technical adviser to ADGAS, which has been delivering LNG from Abu Dhabi to Japan since 1977; a one sixth partner in the Australian NWS project; and is also a participant and operator in the upstream side on Bontang LNG in Indonesia, the largest LNG plant in the world. The company is also the largest shareholder and operator of the planned Tangguh LNG project in Indonesia. The company has also secured market access through the Cove Point terminal in Maryland and Isle of Grain, UK. The company recently completed the construction of a new LNG import and power facility at Bilbao in Spain and is pursuing projects to create new build LNG import facilities in the US and Italy.

 

Further information:

Name: Ronnie Chappell

Office: BP press office London

Phone : +44 (0)20 7496 4324

Name: Michael Zhao

Office: BP press office, Beijing

Phone : +86 (10) 6437 6962 ext.3122

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