China has inked three huge LNG deals on Oct. 20 with U.S. exporter Venture Global LNG as the world's second-biggest economy looks to secure long-term supplies amid soaring gas prices and domestic power shortages.
According to documents posted on the U.S. department of energy website, the agreements with China's state oil giant Sinopec include two 20-year deals for a combined 4 million tonnes of LNG per year.
Those deals bring Venture Global's plant in Plaquemines, Louisiana, with an export capacity of up to 20 million tonnes per annum (MTPA), one step closer to a final investment decision which is expected by the end of this year.
For China—which has this year overtaken Japan as the world's top LNG buyer—the deals will be its single largest LNG trade agreement in terms of volumes without an equity stake, a senior Beijing-based gas industry source said.
They will also double the volumes China imports from the United States, its sixth-ranked supplier last year with volumes at 3.1 million tonnes.
Both of the 20-year deals are sales and purchase agreements, according to the notice, which did not specify when the supplies would start, but added they were signed last month.
One is for 2.8 MTPA of LNG sold on a free-on-board (FOB) basis and the other for 1.2 MTPA sold on a delivered at place unloaded (DPU) basis.
Venture Global also signed a third deal with Unipec, the trading arm of Sinopec, to supply 1 MTPA of LNG from its Calcasieu Pass Facility for three years starting March 1, 2023, according to a separate document posted on the U.S. government website.
Sinopec and Venture Global declined to comment.
A second Beijing-based industry executive said the deals were likely to be announced at China's annual Import Expo in Shanghai next month.
Reuters reported last week that major Chinese companies are in advanced talks with U.S. exporters to secure long-term LNG supplies as rocketing gas prices and domestic power shortages heighten concerns about the country's fuel security.
In addition, U.S. Henry Hub futures linked pricing offers a hedge to Chinese buyers that are heavily exposed to oil benchmark Brent-based pricing.
Venture Global's agreements with Sinopec follows an earlier announcement by China's privately controlled ENN Natural Gas Co. for a 13-year deal with U.S. LNG exporter Cheniere Energy, which was the first major U.S.-China deal since 2018.
Venture Global is building or developing over 50 MTPA of LNG production capacity in Louisiana, including two 10-MTPA phases at Plaquemines, with the first phase expected to enter commercial service in 2024.
In a letter dated Oct. 1, the firm said it had increased annual volumes to Poland's PGNiG under a long-term deal to about 4 MTPA from about 2.5 MTPA from the Plaquemines plant.
Its 10 MTPA Calcasieu Pass facility, expected to cost around $4.5 billion and start producing LNG in test mode in late 2021, has 20-year LNG sale and purchase agreements with Shell, BP, Edison SpA, Galp, Repsol and PGNiG.
Recommended Reading
TotalEnergies Starts Production at Akpo West Offshore Nigeria
2024-02-07 - Subsea tieback expected to add 14,000 bbl/d of condensate by mid-year, and up to 4 MMcm/d of gas by 2028.
E&P Highlights: Feb. 5, 2024
2024-02-05 - Here’s a roundup of the latest E&P headlines, including an update on Enauta’s Atlanta Phase 1 project.
CNOOC’s Suizhong 36-1/Luda 5-2 Starts Production Offshore China
2024-02-05 - CNOOC plans 118 development wells in the shallow water project in the Bohai Sea — the largest secondary development and adjustment project offshore China.
US Drillers Cut Oil, Gas Rigs for First Time in Three Weeks
2024-02-02 - Baker Hughes said U.S. oil rigs held steady at 499 this week, while gas rigs fell by two to 117.
Equinor Receives Significant Discovery License from C-NLOPB
2024-02-02 - C-NLOPB estimates recoverable reserves from Equinor’s Cambriol discovery at 340 MMbbl.