China Import Plans Spark Competition In Fuel Sector

Intensive bidding is building up among BP Amoco PLC, Royal Dutch/Shell Group, Mobil Corp., Total SA, and Enron Energy following approval by China of its first project to import liquefied natural gas. The plan will spawn bumper contracts that could be worth $20 billion over 20 years. The project requires investment of $500 million to build a new gas terminal and 250 miles of pipeline in the prospering southern province of Guangdong. China is very worried about its dependence on coal for 70% of its energy. Approval of the program reflects a shift by Beijing toward minimizing pollution and putting more emphasis on efficient consumption of energy. Industry analysts predict China will need 95 million cubic meters of gas in 2010 compared with 25 million cubic meters a year at present. Besides the bidding from the oil majors, Australia, Indonesia, Malaysia, and Qatar intend to make offers to supply the natural gas.