China’s ENN begins Zhoushan LNG pipeline construction; to complete end-2019
China’s private-owned gas distributor and terminal operator ENN Energy has started construction of a subsea natural gas pipeline, finding another way out for its LNG imports at the Zhoushan LNG receiving terminal, in eastern Zhejiang province, said a senior company official late last week.
“We target to complete construction of the subsea pipeline by the end of this year,” the company official noted, adding that the terminal’s distribution capacity could be up to 3 million mt/year once the pipeline is in operation.
ENN started up its newly-built LNG terminal at Zhoushan island in October 2018, which is currently China’s largest private LNG import facility, with an initial handling capacity of 3 million mt/year, S&P Global Platts reported previously.
However, distribution volumes have been constrained by distribution permits and infrastructure connecting the Zhoushan island with the mainland markets.
China LNG import terminal capacity
The company has obtained a permit to transport LNG by LNG trucks over the cross-sea bridge connected to Zhenhai city end-July, which has enabled ENN to send around 80 LNG trucks each day to the mainland markets from Monday to Friday, the source said.
Prior to that, the company could only send the LNG trucks to mainland markets by ships, in much smaller cargoes, the official added.
ENN’s LNG terminal comprises two LNG storage tanks with a capacity of 160,000 cu m each, one jetty capable of berthing LNG carriers of 80,000-266,000 cu m, and two re-loading docks capable of berthing LNG carriers with a capacity of 3,000-30,000 cu m.
The Hong Kong-listed company has signed supply agreements with Chevron Australia’s Origin Energy and France’s Total to secure its LNG supply over the next five to 20 years.
ENN is facing further uncertainties around its ability to ramp up operations at the facility, as the company needs approval from Zhejiang Energy to be able to access the rest of the distribution network, market sources said.
“The key element is whether Zhejiang Energy allows ENN’s pipeline access to its provincial natural gas pipeline network,” a market source in Beijing said.
“We are still in talks with Zhejiang Energy about the access to their pipeline network,” said a second company official with ENN.
Zhejiang Energy is a provincial government-owned enterprise which dominates natural gas distributions in the Zhejiang province. Apart from natural gas distribution, the company is also engaged in power generation, construction, coal circulation, and energy services, according to information posted on the company’s official website.
“Since Zhejiang Energy has a plan of building their own LNG terminal in the neighboring island, that is expected to increase the difficulty of negotiation for ENN to make a pipeline access to Zhejiang Energy’s pipeline network,” a second market source in east China said.
Zhejiang Energy, jointly with state-owned Sinopec and a Wenzhou local company, have started construction of an LNG receiving terminal with a handling capacity of around 3 million mt/year at Xiaomen Island, Wenzhou city, Zhejiang province, since September last year.
The project, which comprises four LNG storage tanks with a capacity of 200,000 cu m each, one jetty capable of berthing LNG carriers of 80,000-266,000 cu m and a transportation pipeline, is scheduled to be in operations by the end of 2021, the company said.
Zhejiang Energy has also signed a long-term sales and purchase agreement with ExxonMobil to secure 1 million mt/year of LNG over a period of 20 years, Platts reported earlier.