Hong Kong Likely to Join LNG Importers' Club in 2020
06.28.2018 - NEWS

June 28, 2018 [Platts] - apanese shipowner Mitsui OSK Lines has signed on Monday a preliminary agreement to deploy a floating storage and regasification unit in Hong Kong under a long term contract, paving the way for Hong Kong to start LNG imports from as early as 2020.


The Hong Kong Offshore LNG Terminal Project will be Hong Kong’s first LNG import facility, designed to supplement depleting pipeline natural gas supply from China, and replace coal-fired power generation as it attempts to fight air pollution.

The LNG terminal is backed by power utility CLP Power Hong Kong, and will also boost LNG demand in Asia Pacific as well as grow the market for suppliers investing in LNG production projects around the world.

MOL, which owns one of the world’s largest LNG carrier fleets, has signed a preliminary agreement to deploy the 263,000 cu m capacity vessel FSRU Challenger for the project.

FSRU Challenger, built in 2017 by South Korea’s Daewoo Shipbuilding & Marine Engineering, remains the largest FSRU in the world today, and will enter service around end-2020 after commissioning, MOL said in a statement.

It said Challenger, with a length of 345 m and a regasification capacity of 800 Mcf/day, is currently employed on a mid-term charter for a project in Turkey. CLP’s LNG terminal will be located in the waters of southern Hong Kong, east of the Soko Islands.

The LNG terminal will supply gas to the Black Point Power Station located at New Territories and Lamma Power Station located at Lamma Island in Hong Kong.

FIGHTING POLLUTION In 2015, Hong Kong generated 48% of its electricity from coal, 27% from natural gas and the remaining from non-fossil fuels, mainly nuclear.

By 2020, it expects 25% of its electricity to come from coal and 50% from natural gas, and it expects the share of gas to continue rising, while that of coal to continue dropping by 2030.

This is in line with Hong Kong’s Climate Action Plan 2030, which calls for a carbon intensity reduction target of 65% to 70% by 2030, and cutting emissions of sulphur dioxide, nitrogen oxide and other particulate matter.

CLP, one of Hong Kong’s two main power utilities, initially started natural gas imports from Yacheng Gas Field near China’s Hainan Island in 1996, followed by the Second West-East Pipeline that cuts through mainland China from 2013.

However, growing gas demand, depletion of the Yacheng gas fields and a two-month suspension of gas supplies from the WEPII pipeline due to a landslide in December 2015, forced CLP to look at LNG imports for diversification and energy security.

The use of an FSRU is also supported, in Hong Kong’s case, by the limited availability of land, quicker construction time, lower capital cost and reduced environmental impact as compared to an onshore terminal.

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