CLP, the larger of Hong Kong’s two electricity producers, said it is in talks with potential suppliers in Australia, Indonesia, Malaysia and the Middle East to purchase natural gas, but has no plans to sign a contract with state oil firm Sinopec for supplies.

CLP, the larger of Hong Kong’s two electricity producers, said it is in talks with potential suppliers in Australia, Indonesia, Malaysia and the Middle East to purchase natural gas, but has no plans to sign a contract with state oil firm Sinopec for supplies.

Betty Yuen, managing director of CLP Power Hong Kong, said: “We are talking with some potential providers in the region and hope to confirm the new contract next year.”

Meanwhile, Hongkong Electric managing director Cho Ka-sum said Monday that if the company is able to meet emission targets through its own LNG terminal, then it will not need to join the emissions trading plan.

CLP intends to build its own US$600 million (HK$4.68 billion) liquefied natural gas terminal so that it will be able to meet 2010 emission control targets.

Emission control targets were set by the government a few years ago and identified four major air pollutants.

But while it seeks LNG suppliers, CLP is facing a challenge from Sinopec, which will build a HK$10 billion liquefied natural gas terminal in Zhuhai. Last week, it secured a contract to supply natural gas to Macau.

Asked whether CLP will purchase LNG from Sinopec, Yuen would only say that such a decision will depend on its own demand for gas. At present, LNG accounts for a third of the resources required to produce power.

Alice Hui, analyst at UBS research, said the proposed Sinopec project in Zhuhai could create more uncertainty for CLP’s LNG terminal in Hong Kong.

Yuen said it will take a year to decide on the site of the terminal and confirm a contract with a new supplier. Four years will be needed to build it.

A UBS research report Monday said that “we believe the decision by the government on CLP’s proposed LNG terminal in Hong Kong hinges on the energy policy of both the Chinese and Hong Kong governments as well as the complications arising from the calculation of scheme of control assets.”

Yuen added that CLP will look at the feasibility of emission trading with mainland power companies, but that more information is needed. She noted that there are differences in regulatory systems and legal systems.

At tomorrow’s Ninth Plenary of the Hong Kong-Guangdong Co-operation Joint Conference, Chief Executive Donald Tsang Yam-kuen is due to discuss issues such as emissions trading.

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