China is aggressively building bunkering facilities to expand liquefied natural gas distribution to regions along the Yangtze River that are inaccessible to sea-borne LNG, writes Xu Yihe.

The country has just endorsed the construction of the first two LNG terminals along the Yangtze River out of six similar proposals.

These two terminals will be located at Wuhu in Anhui province and Yueyang in Hunan province, two of the dozens of cities located on the Yangtze.

The Wuhu terminal will have an LNG handling capacity of 1.5 million tonnes per annum, while the facility in Yueyang will be able to accommodate 2 million tpa of imports.

Both facilities are scheduled for completion in 2022, industry officials told Upstream at an LNG conference held in China this week.

China Huadian Clean Energy, Guanghui Energy and Yueyang Investment will jointly invest 2 billion yuan ($300 million) to build the Yueyang facility, which will incorporate six LNG jetties and four tanks, each with a storage capacity of 20,000 cubic metres.

This project will be built in three phases.

LNG will be supplied to the Yueyang LNG terminal from Guanghui Energy’s LNG receiving facility in Qidong, about 100 kilometres north of Shanghai.

China Huadian is the largest of China’s five major state-owned power utilities.

It has agreed to buy 1 million tonnes of LNG from UK supermajor BP for 20 years, starting in 2020, and has also agreed a deal with Chevron for a similar volume and start date, but over a 10-year period.

When built, these will be China’s first LNG terminals along the Yangtze.

The four other facilities are being proposed by authorities in Zhenjiang and Jiangyin in Jiangsu province, Wuhan in Hubei province and Jiujiang in Jiangxi province.

These facilities — with a planned total LNG import capacity of about 6 million tpa — are at different stages of development or undergoing government approval procedures.

An official with CNOOC Enertech told delegates that for 6 million tpa of LNG import capacity, China will need at least 10 small LNG vessels with capacities ranging from 8000 to 80,000 cubic metres.

Officials said more such facilities are being planned, with the long-term goal of establishing 10 million tpa of LNG receiving capacity.

The ultimate aim is to provide clean fuels (diesel substitutes) to vessels sailing on the Yangtze.

A recent government policy ruled that in future 10% of newbuild vessels sailing on the Yangtze must be powered by natural gas.

The government also requires that the sulphur content of fuels to power vessels along the Yangtze must be below 0.1% by 2020, giving rise to huge demand for LNG bunkering.

However, officials warned of possible LNG supply constraints that future operators of inland LNG terminals may face.

They said that China currently has only three small LNG vessels with capacity of about 30,000 cubic metres, and only one of these units is in operation.

Hai Yang Shi You 301, an LNG vessel owned and operated by CNOOC Enertech, operates between Hainan Island and Fangchenggang in the Guangxi region, transporting about 500,000 tpa of LNG.

CNOOC Enertech has pencilled in a plan to build two small LNG vessels, with one having already been approved by its parent China National Offshore Oil Corporation.

Weekly

China approves two terminals as part of Yangtze bunkering push