PetroChina Co, the nation's biggest oil producer, has won initial approval from the National Development and Reform Commission to build a liquefied natural gas receiving terminal in Shenzhen.

The company has been allowed to conduct a feasibility study for the project in Guangdong Province, Hu Weiping, deputy director of the commission's oil and gas bureau, told reporters at the National People's Congress over the weekend. The Beijing-based producer is selecting sites and assessing the technical and economic viability of the terminal, Hu said.

PetroChina is building gas import terminals on the nation's east coast as demand for the cleaner-burning fuel rises, Bloomberg News said. The company may sign an agreement to buy LNG from Exxon Mobil Corp's Gorgon project in Australia under a term contract, Chairman Jiang Jiemin said last week.

The Shenzhen terminal may cost as much as HK$8 billion (US$1.03 billion), the South China Morning Post reported.

"We have just received an application for the Exxon deal, and it is going through the approval process," Hu said. It will be up to PetroChina to decide whether the LNG from Exxon will supply the Shenzhen terminal.

The government plans to bring domestic natural gas prices in line with global levels to encourage imports of the fuel within a "workable" period of time, Hu said.

"It takes time to find a balanced pricing system acceptable to both suppliers and consumers," he said.

The country will have to rely on domestic production, cross-border pipelines, LNG terminals and coal-bed methane to meet demand for natural gas, Hu said.

PetroChina has found gas reserves at the Longgang field in Sichuan Province, although it hasn't been a "definite result" on the size of the reserves, Hu said.

China is planning a third natural-gas pipeline across the Xinjiang Uygur Autonomous Region, Wang Lequan, Party chief for the region, said yesterday. Gas will be sourced from Turkmenistan, Uzbekistan and Kazakhstan.

"The third link is still at the drawing board stage," Hu said. "Our current focus is on the second gas pipeline from Turkmenistan and to put it into commercial operation."

(Shanghai Daily March 9, 2009)