The Cuihai Garden housing estate in Futian and the central district of Longgang start using liquefied natural gas (LNG) Saturday (Aug. 12), becoming the first neighborhoods in Shenzhen to do so.

The municipal government, which made the announcement Thursday morning, said a total of 80,000 households in Shenzhen will be using the cleaner, cheaper fuel by the end of this year, and the 800,000 households now using pipeline liquefied petroleum gas (LPG) will switch to LNG by the end of 2008.

The city government has decided to pay 281.8 million yuan (US$35 million) to cover the cost of changing adaptors and replacing certain parts of gas stoves and water heaters for all users in the city.

A household will receive a subsidy of 46 yuan for a stove and 94 yuan for a water heater if it has to buy new ones suitable for LNG use during the transition period.

Residents who want to continue using existing stoves and heaters will have the parts replaced free of charge, but those utensils which have been used for more than eight years are considered too old for replacement and the owners have been advised to buy new ones designed for LNG users.

All LNG users are required to buy LNG-related products recommended by Shenzhen Gas Association for safety.

Bao Deyuan, president of Shenzhen Gas Group, told the media the price of LNG is still under discussion and will be debated at a public hearing before being finalized. "But I can assure you that the price will be absolutely lower than the current pipeline LPG price," Bao said. Newspaper reports earlier this year said the price could be about 10 percent lower.

China and Australia four years ago signed a deal for an annual import of 3.7 million tons of LNG with a price mechanism that will ensure the price is much lower than the current price on the world market.

The Phase I Guangdong LNG project, China's first imported LNG project, was put into operation June 28. Premier Wen Jiabao and Australian Prime Minister John Howard jointly attended the inauguration ceremony for the project, which is also the first natural gas cooperation project between China and Australia. LNG is considered a clean energy that produces less sulphur dioxide and suspended particulates, and is expected to help improve the air in the Pearl River Delta after more and more families and power plants in the region begin to use natural gas.

The Phase I project will supply Shenzhen with 1.47 million tons of LNG a year, accounting for about 40 percent of the total output. Besides household users, three electricity plants in Shenzhen will also use LNG to generate power. The remaining 60 percent will go to neighboring cities.

Editor: Donald