Sinopec delays LNG terminal on gas shortage -paper

BEIJING, Nov 12 (Reuters) - Sinopec Corp has halted work on a liquefied natural gas (LNG) terminal in coastal Qingdao city because it has not been able to secure gas supplies for the project after a deal with Iran foundered, an industry paper reported on Monday.

Work was supposed to start on the Chinese project last year and be completed in 2007, but Sinopec (SNP.N)(0386.HK) has not even gone ahead with ground-breaking and now the terminal may not open until 2010, the China Chemical Industry News said, citing an unidentified company source.

The date the project would come on line depended on the progress of talks with energy exporting countries, so was hard to predict, the source added.

A joint venture with power firm China Huaneng Group, the 4.5 billion yuan ($607.3 million) project was due to have initial capacity of 3 million tonnes a year, rising to 5 million tonnes a year in its second stage, the report said.

China is keen to increase its usage of clean-burning natural gas, but keeps prices at below market levels because of worries about inflation and unrest.

The paper did not say if pricing disagreements had sunk the Iranian deal, originally agreed in 2004 and covering 10 million tonnes of gas a year for 25 years, but they have stymied talks with Russia about pipeline gas imports.

The government pledged to adjust gas prices when it hiked some oil product prices at the start of this month, but has so far given no further details.

But despite the disparity between fixed domestic and climbing international prices, China's energy firms are showing a renewed interest in LNG to feed a string of terminals planned or underway for its booming coastal regions.

Energy giant PetroChina (0857.HK) agreed in September a potential $37 billion long-term deal with Woodside Petroleum Ltd (WPL.AX), covering 2-3 million tonnes of LNG a year for 15 to 20 years from Woodside's proposed Browse project off Western Australia.

($1=7.410 Yuan) (Reporting by Emma Graham-Harrison, editing by Dominic Whiting)