China National Petroleum Corporation (CNPC), the country's largest oil producer, is planning to construct a liquefied natural gas (LNG) terminal at a port in Guangxi Zhuang Autonomous Region, southwest China.

    The proposal was disclosed by Wu Enlai, general manager of the PetroChina Company Limited Guangxi subsidiary, at the Pan-Beibu Gulf Economic Cooperation Forum held last week in the regional capital of Nanning.

    PetroChina Company Limited is a joint stock venture in which China National Petroleum Corporation invested most of its assets in November 1999.

    The proposed LNG project is located in Qinzhou, a port city on the northern brink of Beibu Gulf, not far from another 10-million-ton oil refining project already under construction in the same city.

    "With its geographic convenience, the suggested LNG project can be supplied by Australia, Indonesia, Malaysia, the Middle East and Africa," said Wu, who added the new LNG project was still at the feasibility study stage.

    The proposed new LNG project is deemed by many as part of CNPC's strategy to expand its southwestern China market and, if it materializes, the LPG project will help improve the natural gas supply structure in China and will also help quench the growing thirst for oil products in southwest China.

    China's thirst for clean and efficient energy has boosted the demand for natural gas. It began importing LNG last year with its first LNG project in Shenzhen, south China's Guangdong Province, and signed a separate LNG supply agreement with Malaysia's Petronas for the LNG project in Shanghai.

    Both LNG projects are being built by China National Offshore Oil corporation (CNOOC), China's largest offshore oil producer.

    CNPC broke ground for the construction of its 10-million-ton oil refinery project in Qinzhou last year. The projected refinery will be able to produce seven million tons of oil and petrochemical products for the markets in Yunnan, Guizhou and Guangxi when the project gets into operation in 2008.

    CNPC currently supply its southwest market from its refinery in Dalian, a port city in northeast China's Liaoning Province. By processing the imported crude in the Qinzhou refinery, CNPC could cut its transportation costs by 200 yuan per ton.

    The oil and petrochemical products manufactured by the oil refinery in Qinzhou, with a construction budget of 15.2 billion yuan, could also be exported to Southeast Asian countries, said Wu. (One U.S. dollar equals to 7.58 yuan)