BY DONALD HOOK

THE recent announcement that China’s largest refiner, Sinopec Corp, has signed an agreement to buy liquefied natural gas from PNG was well covered in the Chinese media.

Under the agreement, Sinopec will purchase 2 million tons of LNG per annum for 20 years from the Exxon Mobil-led PNG project.

The gas will arrive at Qingdao in Shandong Province, where Sinopec will build a LNG terminal. Initially, it will have a capacity of 3 million tons a year but this will be expanded to 5-6 million tons.

The English-language China Daily Business quoted a senior official of Sinopec as saying the terminal will provide long term, reliable and clean natural gas resources to the Shandong market.

However, the official did not disclose when the terminal would come into operation.

China received its first LNG shipment in May 2006. It plans to build more than 10 terminals on the east coast to meet a government target to double the use of natural gas in five years.

At present, China imports large amounts of LNG from Qatar in the Middle East.