China National Offshore Oil Corp (CNOOC), the nation's premier offshore oil company, has set up a joint venture with local partners to build a liquefied natural gas (LNG) project in Zhejiang Province, East China.

The joint venture will build the plant in Ningbao to receive 3 million tons of imported LNG a year.

The terminal will turn the liquid back into gas to supply a 2,800 megawatt gas power plant in which CNOOC holds a 30 per cent stake.

Investment in the project, including an LNG receiving terminal, a dock to accommodate imported LNG, and a gas trunkline, adds up to US$520 million.

The project, which got the green light from the government in early December, is expected to start operations in 2008.

The terminal will increase its capacity to 6 million tons in the second phase, pending market developments.

CNOOC's subsidiary CNOOC Gas and Power Limited holds a 51 per cent stake in the joint venture, CNOOC said in a statement yesterday.

Zhejiang Provincial Energy Group Company holds 29 per cent of the joint venture's shares, while Ningbo Power Development Corp has the remaining 20 per cent.

The statement said the companies have started evaluating LNG importing resources, LNG transportation, and the marketing of the gas.

Aiming to nurture the LNG business into its new cash cow, CNOOC is building a chain of LNG terminals along the coast.

The company is building China's first two LNG projects in South China's Guangdong Province and East China's Fujian Province which have a combined LNG processing capacity of 6.3 million tons a year.

Earlier this month, the company set up another joint venture with Shanghai Shenergy Group to build a 3-million-ton-a-year LNG project in Shanghai.

Editor: Olivia