China will continue to support the development of liquefied natural gas (LNG) projects despite the rising price of natural gas on the world market, a senior official said on Tuesday.

"The Chinese government encourages the use of natural gas but it can not reach agreements on the price of natural gas with potential suppliers," said Zhang Guobao, deputy director of the National Development and Reform Commission (NDRC) at the 7th Sino-US Petroleum & Natural Gas Forum in Hangzhou, capital of east China's Zhejiang Province.

Sources with the NDRC's Energy Department said that Shanghai was seeking to develop LNG but was struggling to negotiate a deal with overseas suppliers.

The Energy Information Administration (EIA) of the US predicted in August that the average Natural Gas Spot Price would be US$7.69 and US$8.17 in 2007.

The natural gas resources for another project under construction in east China's Fujian Province with a designed output of 2.6 million tons per year by 2007 will come from Indonesia, they said.

China's first LNG project was built in south China's Guangdong Province and is supplied by an Australian company. Chu yanqun, vice president of the Guangdong Dapeng LNG Company who is responsible for the project, said 29.1 billion yuan had been invested in it.

The first boat of liquefied natural gas arrived in May and the project will be put into commercial operation on September 28, he said.

(Xinhua News Agency September 13, 2006)