Sale contracts for China's second liquefied natural gas (LNG) project in East China's Fujian Province were signed on Sunday in Beijing, the project's operator China National Offshore Oil Corp (CNOOC) said.

CNOOC is to sell gas it will import from the Tangguh LNG project in Indonesia to five city piped-gas firms and three power plants in the eastern province, the contracts say. China Daily reported Tuesday.

The contracts also include an agreement for the Fujian Electric Power Co to purchase electricity from three planned power plants and a LNG transportation deal between CNOOC and its local partner.

Signing of these contracts, a key part of the whole LNG project, paves the way for LNG imports from Indonesia in 2007, the company said.

CNOOC signed a pact in 2002 to import LNG from the BP-led Tangguh project valued at around US$8.5 billion over 25 years.

The first phase of the Fujian LNG project includes a port, facilities to store the compressed, super-cooled natural gas, 340-kilometre-long gas pipelines and three gas-fired power plants with a total generating capacity of 3.5 million kilowatts.

With a total investment of 24 billion yuan (US$2.9 billion), the first phase is due for completion in the first half of 2007, when it will start importing 2.5 million tons of gas a year from Indonesia.

The second phase construction of the Fujian terminal will be started upon completion of the first, the company said. It added that the annual capacity for the second phase would reach 5 million tons.

The Fujian LNG project is part of China's efforts to promote the consumption of clean and high-efficiency energy.

Coastal areas such as Guangdong and Fujian provinces will increase LNG imports during the next few years, to better use clean fuel and ease the energy shortage in the area, said Zhang Guobao, deputy director of the National Development and Reform Commission, at the contract signing ceremony.

China has planned to increase gas consumption in its total energy consumption mix to 6 per cent by 2010 from the current less than 3 per cent.

(China Daily)