Tuesday, September 02, 2008


Can mainland China really supply Hong Kong with fuel and power despite the ongoing shortage?



China, the world's second-biggest energy consumer, agreed to extend the supply of natural gas and electricity to Hong Kong to meet rising energy demand in the city.

China National Offshore Oil Corp., the nation's largest offshore oil producer, will supply gas for an additional 20 years from its Hainan fields, Chief Executive Donald Tsang said in Hong Kong .

China Guangdong Nuclear Power Holding Co., the nation's second-biggest nuclear reactor operator, will extend power supply for two decades beyond 2014, the Hong Kong government said.

Hong Kong, which relies on coal for about 60 percent of its power generation, wants to increase the use of cleaner-burning natural gas and nuclear power, Tsang said. The central Chinese government will continue to support "stable" energy supply to Hong Kong, according to an initial agreement.

China National Offshore currently supplies 2 billion to 2.5 billion cubic meters of gas a year under an agreement that expires in 2016, Hong Kong government statistics show.

China National Petroleum Corp., the country's largest oil producer, will study supplying gas to Hong Kong through the second West-East pipeline, Zhang Guobao, vice chairman of the National Development and Reform Commission, said.

A liquefied natural gas terminal will be built in Shenzhen to link with the pipeline, with potential participation by CLP Holdings Ltd., Hong Kong's biggest power supplier, Edward Yau, secretary for environment in Hong Kong, told reporters.

"The sustained supply of clean energy from the mainland will greatly reduce the need of Hong Kong to build a LNG terminal within its territory," the Hong Kong government said in a statement. "The resulting reduction in capital investment by the power company concerned will relieve the pressure for electricity tariff increases."

The additional supply of natural gas and electricity will be "no less" than the current level, Yau said.

"Arrangements for supplying natural gas and electricity to Hong Kong, such as pricing and supply quantity, will be worked out on commercial principles between the relevant enterprises," the Hong Kong government said in the statement.

How long can this additional load on the mainland's resources last?