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SINGAPORE, Oct. 20 (Reuters) – China has signed three massive liquefied natural gas (LNG) deals with US exporter Venture Global LNG as the world’s second-largest economy seeks to secure long-term supplies amid rising gas prices and domestic power shortages.
According to documents posted to the US Department of Energy website, the agreements with Chinese state oil giant Sinopec include two 20-year deals for a combined 4 million tons of LNG per year.
Those deals bring Venture Global’s plant in Plaquemines, Louisiana, with an export capacity of up to 20 million tons per year (mtpa), one step closer to a final investment decision expected by the end of this year.
For China – which has overtaken Japan this year as the world’s largest LNG buyer – the deals will be its largest LNG trade deal in terms of volumes without an equity stake, said a senior Beijing-based gas industry source.
They will also double the volumes China imports from the United States, the sixth supplier last year with volumes of 3.1 million tons.
Both 20-year deals are sales and purchase agreements, according to the announcement, which did not specify when deliveries would begin, but added that they were signed last month.
One is for 2.8 million tons of LNG sold on a free-on-board (FOB) basis and the other for 1.2 million tons per year sold on a delivery-to-place basis (DPU).
Venture Global has also signed a third deal with Unipec, Sinopec’s trading arm, to supply 1 million tons of LNG per year from its Calcasieu Pass Facility for three years from March 1, 2023, according to a separate document posted on the U.S. website. government has been placed.
Sinopec and Venture Global declined to comment.
A second Beijing-based industry manager said the deals are likely to be announced next month at China’s annual Import Expo in Shanghai.
Reuters reported last week that major Chinese companies are in advanced talks with US exporters to secure long-term LNG supplies as rising gas prices and domestic power shortages raise concerns about the country’s fuel security. read more
In addition, US Henry Hub futures linked pricing provides a hedge to Chinese buyers who are highly exposed to benchmark oil-based Brent prices.
Venture Global’s agreements with Sinopec follow an earlier announcement by China’s privately controlled ENN Natural Gas Co (600803.SS) for a 13-year deal with US LNG exporter Cheniere Energy (LNG.A), the first major agreement between the US and China since 2018. read more
Venture Global is building or developing more than 50 million tons of LNG production capacity in Louisiana, including two 10 million tons per year phases at Plaquemines, with the first phase expected to be commissioned in 2024.
In a letter dated Oct. 1, the company said it had increased annual volumes to Poland’s PGNiG under a long-term agreement to about 4 mpta tons from about 2.5 million tons per year from its Plaquemines plant.
The 10 mtpa Calcasieu Pass facility, which is expected to cost approximately $4.5 billion and start producing LNG in test mode by the end of 2021, has 20-year LNG sales and purchase agreements with Shell, BP, Edison SpA, Galp, Repsol and PGniG.
Reporting by Jessica Jaganathan and Chen Aizhu Editing by Stephen Coates and Mark Potter
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