The Royal Dutch Shell has signed a non-binding letter of intent (LOI) with a China-based energy company Guanghui Energy to construct a liquefied natural gas (LNG) import terminal in east China.

Guanghui Energy has plans to construct LNG plants in Qidong, Jiangsu province.

The plants are expected to be built with a storage capacity starting from 600,000 tons per year (tpy) and transit plant to 1.5 million tpy LNG import facility under second phase and 3.5 million tpy import terminal in a third stage.

Shell is interested to set up a joint venture with Guanghui Energy to jointly invest and operate the 1.5 million tpy facility from the second phase.

Shell Companies China spokeswoman Chen Xiaoni was quoted by Reuters as saying, "Shell and Guanghui Energy have signed a non-binding Letter of Intent that confirms the intention of the two parties to explore the possibility of developing a LNG import terminal project in Qidong, Jiangsu province."

China currently operates five terminals along its east coast to import the super-chilled natural gas and is planning to add new facilities to address the increasing fuel demand, reported the news agency.