A CNOOC storage facility in Hainan
CNOOC Hainan Natural Gas, a subsidiary of China National Offshore Oil Corporation (CNOOC), won approval from the National Development and Reform Commission (NDRC) to build LNG facilities in Hainan, reports National Business Daily, citing the NDRC.

The facilities will require an investment of 6.52 billion yuan. Covering an area of 57.2 hectares, the work involves port engineering works and the building of terminals and pipelines.

The first phase of the work will involve the building of two million tons of LNG handling capacity per year, and is expected to be completed in 2014.

CNOOC and Hainan Development Holdings hold respective stakes of 65 percent and 35 percent stake in CNOOC Hainan Natural Gas, which will oversee the building and management of the facilities.

Apart from the aforesaid LNG facilities, CNOOC will build LNG warehousing and transshipment facilities. The company will build 18 LNG receiving terminals, with annual capacity of 15-20 million tons.

A principal from CNOOC Hainan said the company had signed sales contracts for 4.23 billion cubic meters of LNG per year with dozens of its local downstream customers.

CNOOC currently operates has three LNG terminals in Shenzhen, Fujian, and Shanghai and plans to increase LNG imports to 30 million tons a year by 2020. CNOOC currently imports more than 20 million tons of LNG, according to the report.

CNOOC competes with PetroChina (601857, 0857.HK) and Sinopec (600028, 0386.HK) in the LNG market in China. It was reported that CNOOC will invest another 10 billion yuan over the next five years on the building of 1,000 LNG receiving terminals. 

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