(Yicai Global) Nov. 28 -- Offshore Oil Engineering has undertaken an engineering, procurement and construction contract for the first phase of China's largest liquefied natural gas receiving terminal to date in a project worth CNY4.38 billion (USD623 million), and which is initially projected for completion at the end of 2022, the company announced yesterday.

The project sits on the largely-artificial island of Caofeidian in the port of Tangshan, which lies 180 kilometers to the east of Beijing in Hebei province. Its first phase will build four 200,000 square meter natural gas tanks and include a wharf and other supporting facilities, per the announcement, and the company will also take charge of design management, procurement, engineering construction and equipment commissioning.

China has actively built LNG receiving stations in ports in recent years to curb air pollution. Caofeidian is an important port in the Bohai Bay. The Caofeidian Industrial Zone is an emerging steel, chemical and equipment manufacturing base under construction in North China. The original island, now greatly enlarged by reclamation, was named after a palace for a concubine of Emperor Tang Taizong of the Tang Dynasty (618-907CE) who was exiled there.

Tianjin-based Offshore Oil Engineering' shares [SHA:600583] closed up 0.87 percent at CNY6.96 (USD0.99) this morning on the news.

Total investment in the Caofeidian complex, which will be the largest-capacity LNG receiving port in China, will be CNY32 billion. The first phase will have an annual production capacity reaching 7 million tons of natural gas on completion. It will also form an emergency peak center together with the neighboring Port of Tianjin in Tanggu, and their combined receiving and storage capacity will hit about 40 million tons.

Hong Kong-based China Suntien Green Energy [HK: 00956], which the Hebei government controls, owns the Caofeidian complex.

Offshore Oil Engineering's parent, Beijing-based China National Offshore Oil Corporation, also known as CNOOC Group, is China's third-largest petroleum company. The firm ranked 63rd in the 2019 Fortune Global 500 and 32nd in Petroleum Intelligence Weekly (PIW)'s 2018 World's Top 50 Oil Companies, information on CNOOC's website shows, and Moody's and Standard & Poor's assigned the Company A1 and A+ credit ratings at the end of 2018.

Liquefied natural gas is a composition of methane and some mixture of ethane used to convert natural gas to liquid form for ease and safety of storage transport, according to the Investopedia reference website.

Editor: Ben Armour