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Construction of a 7.4-billion-yuan receiving station of Guangdong's long-awaited LNG (liquefied natural gas) network project started in Shenzhen Tuesday.

Covering an area of more than 40 hectares, the station has been designed to reach a production capacity of more than 3.7 million tons a year.

The US$892-million project includes two large gas tanks, an LNG port and natural gas transmission pipelines.

Each of the two gas tanks will reach a capacity of more than 160,000 cubic metres.

A French company and an Italian firm have won the deal to build the project via public biddings.

"Construction of the receiving station indicates that the province's LNG project has formally begun," an official from Guangdong Provincial Development and Planning Commission said yesterday.

The gas-receiving station will be completed and start receiving gas from overseas in June of 2006, according to the official.

The 30-billion yuan (US$3.61 billion) LNG project consists of a pipeline network of 509 kilometres and will be completed in five years.

The first phase of the project will be finished in the second half of 2006.

It will be able to provide gas to the cities of Shenzhen, Guangzhou, Dongguan and Foshan in the Pearl River Delta.

The whole project will be completed in 2008. It will be able to provide gas to all major cities in the Pearl River Delta and Hong Kong.

World petroleum giant, British Petroleum (BP), has won the contract to build the LNG project while Australia has clinched the deal to export natural gas to Guangdong.

Guangdong, which can self-supply less than 10 per cent of the energy it needs, will annually import more than three million tons of natural gas when the LNG project is fully completed, the official said.

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