China National Offshore Oil Corporation said it has started on the construction of LNG facilities in Hainan, reports Shanghai Securities News, citing a company announcement.

Investment in the LNG program is expected to cost a total of 6.5 billion yuan.

The facilities are scheduled to be put into operation in August 2014, with CNOOC gaining two million tons of LNG handling capacity per year.

Upon full completion in 2016, CNOOC will have three million tons of LNG handling capacity per year.

The LNG program, which consists of port engineering works, and the building of terminals and pipelines, is jointly invested in by CNOOC Gas and Power Group, a subsidiary of CNOOC, and Hainan Development Holdings.

After completion, the LNG program will supply natural gas to all the cities in Hainan, and some parts of Guangdong and Guangxi provinces.

In addition, CNOOC will build LNG warehousing and transshipment facilities in the future. It will build 18 LNG receiving terminals, with annual capacity of 15-20 million tons.

The Hainan LNG program is CNOOC's sixth LNG program. CNOOC will also build LNG facilities in Guangdong, Guangxi, Jiangsu, and Tianjin in the future.

CNOOC is the current market leader in the domestic LNG sector. It sold more than nine million tons of LNG in 2010 and has annual LNG receiving capacity of more than 12 million tons.

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