* Deal subject to FID on import terminal - source
* Deal is to supply about 1.2 mtpa LNG for about 10 yrs
* Hong Kong looks to increase gas in fuel mix to 50 pct by2020(Adds details, company comments)
By Jessica Jaganathan
SINGAPORE, March 15 (Reuters) - Royal Dutch Shellis close to bagging a deal to supply Hong Kong with liquefiednatural gas (LNG), beating out major competitors for the rightto be the first company to supply LNG to the city.
Shell has edged out companies such as Malaysia's Petronasto supply LNG through a long-term contract to HongKong utility CLP Power, two sources familiar withthe matter told Reuters.
Hong Kong is undertaking a massive shift to using morenatural gas to fuel its electric power generation from coal,potentially creating a steady and lucrative demand source in theAsian LNG market.
Under the deal, Shell will supply about 1.2 million tonnesper annum (mtpa) of LNG for about 10 years starting after 2020,the sources said, declining to be named as they were notauthorised to speak to the media.
However, the supply agreement will be subject to a finalinvestment decision (FID) for an offshore LNG import terminalthat will include a floating storage and regasification unit(FSRU), one of the sources said.
It was not immediately clear if the deal was binding or amemorandum of understanding.
CLP and Petronas did not immediately reply to requests forcomment. Shell declined to comment on the specific deal and saidit "continuously seeks opportunities to grow and improveprofitability".
"This may include talking with third parties from time totime, any conversations are confidential," a spokeswoman said.
As part of its commitment to the Paris Climate ChangeAgreement, Hong Kong is aiming to increase the use of naturalgas in its total fuel mix for power generation to about 50percent by 2020 from 22 percent as of 2012.
Hong Kong currently produces power using imported fuel indomestic power plants or from imported natural gas from themainland. The country's coal-fired plants will reach the end oftheir useful life in the next decade.($1 = 7.8412 Hong Kong dollars)(Reporting by Jessica Jaganathan; Editing by ChristianSchmollinger)
