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China’s LNG Terminal Buys Russian Cargo From Shell (Update1) 

Bloomberg, By John Liu 

April 14 (Bloomberg) — Guangdong Dapeng LNG Corp., operator of one of China’s two liquefied natural gas terminals, bought a second spot cargo of the fuel this month to supply a refinery, said an official with knowledge of the shipment.

The Dapeng terminal paid less than $5 per million British thermal units on a free-on-board basis for LNG from Royal Dutch Shell Plc’s Sakhalin II project, said the official, who asked not to be identified because the transactions are confidential. The cargo will be delivered late this month, the official said.

The import terminal, a venture between China National Offshore Oil Corp.and BP Plc, resumed spot purchases in April after a seven-month halt. The LNG will be used as fuel at China National Offshore’s Huizhou refinery, which started operations last month. The first shipment from Malaysia arrived on April 2, AISLive ship-tracking data on Bloomberg shows.

The $900 million LNG import terminal had suspended spot cargo purchases since September after economic growth slowed and demand in the nation’s manufacturing hub fell. Guangdong Dapeng mainly supplies the fuel to power producers in the southern province of Guangdong.

The nation’s first LNG import terminal buys spot cargoes to supplement contractual supply from Australia. China paid $20.43 per million British thermal units, a record, for an individual cargo from Algeria in September. Natural gas spot prices at Louisiana’s Henry Hub, a global benchmark, were at $3.608 per million British thermal units at 8:59 a.m. Singapore time.

China, the world’s second-largest energy user, aims to double the use of LNG by 2010 to reduce pollution. China National Offshore is the nation’s third-largest oil company.

A spot LNG cargo typically weighs between 55,000 and 60,000 metric tons. LNG is natural gas chilled to liquid form, reducing it to one-six-hundredth of its original volume at minus 161 degrees Celsius (minus 258 degrees Fahrenheit) for transportation by ships to destinations not connected by pipeline.

To contact the reporter on this story: John Liu in Shanghai atjliu42@bloomberg.net

Last Updated: April 14, 2009 02:52 EDT