SHANGHAI, Mar. 22 -- PetroChina Co, the nation's largest oil company, has received government approval for a 7.38-billion-yuan (US$950 million) liquefied natural gas terminal in eastern China's Jiangsu Province.

The first phase of the project in Rudong will have capacity to receive 3.5 million metric tons of LNG a year, Pacific Oil & Gas Ltd, a 35 percent stake holder in the project, said in a statement yesterday. The approval came from the National Development and Reform Commission, China's top economic planner, it said.

PetroChina is building gas import terminals as demand for cleaner-burning fuels increases in the world's fastest-growing major economy. China wants natural gas to account for eight percent of total energy needs by 2010 from about three percent now, to cut pollution and reliance on crude oil.

"The fuel will be sourced from the Middle East and other countries," Frank Ni, a Beijing-based spokesman for Pacific Oil & Gas, told Bloomberg News."Supply talks have pretty much been completed."

Commercial operations at the terminal will start in the first quarter of 2011, said Pacific Oil & Gas, part of Singapore-based RGM International Pte, a company with interests in paper and pulp, crude palm oil, oil and natural gas.

The terminal's capacity will be enlarged in the second phase of the project to receive six million tons of the fuel each year, Pacific Oil & Gas said.

LNG is natural gas that's been chilled to a liquid form, reducing it to one-six-hundredth of its original volume, for transportation by ship to destinations not connected by pipeline.

On arrival, it's turned back into gas for distribution to power plants and other buyers.

The Jiangsu terminal is the second LNG project of its type in China that is partly owned by a foreign partner.