China’s LNG industry began in Guangdong, with the development of China’s first LNG terminal at Dapeng Bay, to the east of Shenzhen, later known as Guangdong Dapeng LNG (GDLNG). The project was announced in 1998; the North West Shelf project in Australia won the contract in 2002 to supply 3.7 million tonnes of LNG, per year, for 25 years; and terminal construction began in December 2003. The first delivery was made in May 2006.
Meanwhile, two leading Chinese shipping companies – COSCO and China Merchants – formed the Guangdong LNG Transportation Project Office (GLTPO), tasked with designing and implementing the LNG transportation arrangements. As part of the bidding process for the supply of LNG, bidders offered shipping collaboration proposals, including a commitment to support a new LNG ship management company, which was to be responsible for managing the LNG carriers being built in Hudong Zhongua’s yard in Shanghai.
As one of the participants in the North West Shelf project, BP – through its subsidiary BP Shipping – agreed to act as the “foreign partner” in the ship management joint venture, and to offer provide support, mainly by secondments of experienced sea and shore staff. In July 2004, BP Shipping joined CLNG in forming China LNG Shipping (International) Co. Ltd (CLSICO), a Hong Kong registered company, owned 60% by CLNG and 40% by BP Shipping. Ship management agreements for the two GDLNG LNG carriers (to which a third was added later) were signed in August 2004.
Subsequently, CLSICO was awarded contracts to manage 2 LNG carriers for Fujian LNG (FJLNG) and, more recently, one LNG carrier for Shanghai LNG.
By June 2012, CLSICO had become sufficiently mature to enable BP Shipping to announce its intention to exit in mid 2013,consistent with the shareholders’ agreement between CLNG and BP Shipping. BP shipping therefore sold its shares in CLSICO to CNOOC on 1st August 2013. Nevertheless, CLNG as the remaining shareholder has decided that CLSICO will continue to be resourced by a combination of Chinese and Western seafarers, both in the office and on the ships, for the foreseeable future.