HONG KONG • Hong Kong is thirsty for cheap liquefied natural gas (LNG).
The two companies that supply power to Asia's third-richest city are jointly conducting a study to build an LNG receiving terminal that could be anchored off its coast.
Units of Power Assets Holdings, owned by billionaire Li Ka Shing, and CLP Holdings, owned by fellow Hong Kong billionaire Michael Kadoorie, are aiming to have the terminal operating by the end of 2020, according to a CLP spokesman.
Offshore terminals are among the hottest assets in energy. Known as floating storage and regasification units, they allow buyers fast access to an over-supplied LNG market that has pushed down spot prices in Asia by more than half since October 2014.
Greater LNG imports could help Hong Kong reduce its reliance on coal and reach its goal of increasing the proportion of natural gas in its energy mix to about 50 per cent by 2020.
"To further reduce our reliance on coal, HK Electric is partnering with another energy company in the city to study the feasibility of building an offshore liquefied natural gas terminal using floating storage and regasification unit technology in Hong Kong," Power Assets chairman Canning Fok said in a written statement accompanying the firm's second-quarter earnings report.
"If the project receives government approval, the terminal will improve HK Electric's access to and negotiating power in the natural gas market as well as the security of supply."
CLP is leading the development of the project, a company spokesman said. The companies are conducting an environmental impact assessment, which will take 12 to 18 months to complete. It would then apply for government approval and make a final investment decision, with construction projected to start in 2019.
Hong Kong generated about 53 per cent of its power from coal as of 2012, compared with about 22 per cent each for nuclear energy and natural gas, according to its Environmental Protection Department, which is behind the 2020 goal.