Malaysia's national petroleum corporation said on Monday it was ready to enhance cooperation with China in the energy sector.

Tan Sri Mohd Hassan Marican, president and CEO of Petronas, said his company had been working with Chinese petroleum companies in Africa and such cooperation would help cement ties between Malaysia and China.

He told Shanghai's vice mayor Feng Guoqin on Monday, that Shanghai was Petronas' first buyer of liquefied natural gas (LNG) on the Chinese mainland.

Petronas would work closely with China to ship LNG from Malaysia to Shanghai before the opening of the World Expo in that city in 2010, he said.

Shanghai LNG Co., Ltd. reached a deal with a subsidiary of Petronas last year and construction started in January on a Shanghai terminal that will receive LNG from Malaysia starting from 2009 for a period of 25 years.

The project was approved by the National Development and Reform Commission last December.

Shanghai will received around 1.1 million tons of LNG in the first three years of the contract, with that amount rising to 3 million tons by 2012.

The Shanghai terminal is located in the Yangshan deep-water port, an international shipping center in Shengsi County in neighboring Zhejiang Province. Located at the mouth of the Yangtze River, the terminal is about 45 km from the Pudong International Airport.

The first phase of the project involves a total investment of 7 billion yuan (900 million U.S. dollars) and includes three 165,000-ton concrete tanks and a dock that can anchor ships as large as 200,000 cubic meters.

The project, along with China's west-to-east gas pipeline and the East China Sea gas project, is expected to help meet Shanghai's energy demands, improve energy efficiency and cut emissions, said a spokesman with the National Development and

Reform Commission.

The deal is the largest trade contract between China and Malaysia.

Petronas draws its natural gas supplies from the Bintulu region, one of the world's largest LNG production bases in eastern Malaysia. It boasts an annual output of 23 million tons and mainly ships to Japan and the Republic of Korea.

Source: Xinhua