OREANDA-NEWS. February 01, 2012. China Petroleum and Chemical Corp's (Sinopec Corp) plan to build a 3 million tonne-per-year import terminal of liquefied natural gas (LNG) in south China is expected to win final state approval soon, a source with direct knowledge of the USD 2.8 billion project told Reuters.

The terminal, to be built in a man-made island off the southwestern coastal city Beihai, is slated to start operations around mid-2015, slightly behind an earlier plan, and will bring in the super-chilled natural gas from Queensland, Australia.

"The project has just passed the final evaluations by NDRC (National Development and Reform Commission) experts. The final approval from the government should be soon," said the source, who requested anonymity as he is not authorised to speak to media.

China, the world's top energy user, is on a fast track to boost use of the lower-carbon fuel in the coming decades, aiming to triple gas use by 2020.

The Beihai project would be the second LNG import facility for Sinopec Corp, which is building its first terminal in east China's Qingdao and planning a new one in east China's Wenzhou.

For a mega LNG import terminal to get final approval, companies need to secure a long-term gas supply agreement and clearance by China's environmental watchdog, which is normally less strenuous compared with refining or chemical plants.

Appraisals by experts of the National Development and Reform Commission, the super economic planner, is among the last key steps before the final greenlight.

The Beihai terminal will supply gas to a dozen cities in Guangxi and two cities in neighbouring Guangdong province through a planned pipeline grid.

Sinopec will land-fill a 0.5 square kilometre island off Beihai for the facility, on which it also plans to add more LNG tanks under a phase-two plan to boost the total receiving annual capacity to 9 million tpy, said the source, without giving a timeline for the completion of the second phase.

Combined, the first-phase would cost some 17.6 billion yuan (USD 2.79 billion).

Sinopec, Asia's top refiner, is a relatively latecomer in China's LNG building boom versus domestic rivals CNOOC Ltd and PetroChina, but the state firm appears to be boosting its natural gas portfolio aggressively through recent acquisitions from Australia to North America.

The gas to supply the Beihai terminal will come from Australia. In December, Sinopec Group, parent of Sinopec Corp, agreed to raise its stake in the \\$20 billion Australian Pacific LNG joint venture to 25 percent and to buy more gas from the project under a 20-year supply pact.

In its first foray into the U.S. upstream business, Sinopec said early this month it would invest USD 2.2 billion for a third of Devon Energy Corp's interest in five developing shale oil and gas fields.