Hong Kong Utilities Sign LNG Deal with Shell

Castle Peak Power Company (Capco) and Hongkong Electric (HK Electric) announced June 21 an agreement with Shell Eastern Trading for long-term LNG supplies for the Hong Kong offshore LNG terminal.

Once the terminal is operating, Shell will supply LNG to both Capco and HK Electric from its worldwide LNG portfolio, the two utilities said in a joint statement without offering details. Capco is a 70:30 joint venture of CLP Power Hong Kong and China Southern Power Grid International, a wholly owned subsidiary of China Southern Power Grid Co.

“This fuel supply contract will enable us to access price-competitive natural gas and broaden our sources of natural gas, ensuring a reliable and stable fuel supply for Hong Kong,” CLP Power managing director T K Chiang said.

Last year, CLP Power received the environmental nod for its offshore LNG terminal. The facility will distribute gas to two Hong Kong destinations, the Black Point power station located at New Territories and Lamma power station on Lamma Island.

“HK Electric is taking steps to substantially increase the use of natural gas for power generation, from currently over 30% of total output to around 70% by 2023, as we support the government’s policy and targets to combat climate change and improve air quality while transforming Hong Kong into a low-carbon city,” HK Electric's managing director Wan Chi-tin said.

The Hong Kong offshore LNG terminal project is being developed to support the HKSAR government's target of generating about half of Hong Kong's electricity from natural gas from 2020 onward to improve air quality.