Difficulties experienced from meeting stringent requirements and securing state approval in trying to construct a land-based receiving terminal has prompted the China National Offshore Oil Corp (CNOOC Group) to build the country's first floating liquefied natural gas (LNG) receiving and storage facility.

The facility, pegged at 5.7 billion yuan ($892.84 million), would be stationed off the northern city of Tianjin. It would be able to receive LNG imports up to 2.2 million tonnes per year.

China's LNG imports, which now accounts a tenth of its total gas use, have reached to 9.4 million tonnes, growing by a quarter in the first 10 months of 2011 from a year ago, according to customs data sourced by Reuters.

CNOOC is still undecided whether it will purchase or rent a floating facility for the Tianjin project, whose operation is expected to begin in 2014, Reuters quoted an unidentified CNOOC official. The same official added that CNOOC has plans to add several more floating facilities along the coastline.

Limited land sites along the coastline, coupled with growing competition among China's main investors including CNOOC, PetroChina and Sinopec Corp., led the shift to floating facilities.

China, the world's second-largest economy and currently second largest consumer of energy, has been increasing the number of its onshore LNG receiving terminals along its east coast to handle imports of the super-chilled natural gas shipped by tankers, all to meet surging domestic demand for the cleaner-burning fuel. China's growing population and rapid urbanisation drive the country to consume as much energy as well.

Smaller tankers will move towards the floating facility to get the imported LNG and will ship the fuel to an existing onshore receiving terminal for regasification. After which it will either be pumped into the city gas grids or trucked away by the country's growing fleet of LNG trucks to directly supply residential areas and small power stations.

This early, CNOOC mulls to extend the project into a second phase, and will solicit the partnership of the Tianjin port authority and the Tianjin city gas company to build a 6 million tonne-per-year onshore LNG receiving terminal along four storage tanks with a 160,000 cubic metres capacity each. Target implementation is on 2015.

CNOOC is China's leading LNG terminal developer, with three receiving terminals operating in southern China.

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