China has signed three Liquefied Natural Gas (LNG) agreements with the United States of America. The world's second largest economy aims to secure long-term supplies amid rising gas prices and domestic energy shortages.
The agreements by Chinese state oil giant, Sinopec, and US exporter, Venture Global LNG, include two 20-year deals for a total of four million tons of LNG per year, according to the (US) department of energy.
Both of the 20-year agreements, signed last month, are offtake agreements, however, the start date of supply is unknown. One is for 2.8 mtpa (million tons per year) of LNG sold on a FOB (free on board) basis and the other for 1.2 mtpa sold on a DPU (free on board) basis delivered to the unloaded site.
A separate US document states that Venture Global has signed a third agreement 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.
The agreements were to be announced at the China Annual Import Exhibition, to be held in Shanghai in November
These understandings bring Venture Global LNG closer to a Final Investment Decision that could come out later this year.
For China these arrangements will be its largest LNG trade agreement in terms of volumes without equity participation. Remember that this year China has overtaken Japan as the world's largest LNG buyer, with the US as its sixth largest supplier.
Although the companies involved in the deals refused to confirm this information, according to Reuters, the agreements were likely to be announced at the annual China Import Expo to be held in Shanghai in November.
Venture Global's agreements with Sinopec follow an earlier announcement by privately held Chinese company ENN Natural Gas Co (600803.SS) for a 13-year deal with US LNG exporter Cheniere Energy (LNG.A), which was the first major US-China deal since 2018.
Venture Global is building or developing more than 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 October 1, the company said it had increased annual volumes for Poland's PGNiG under a long-term agreement to about 4 mtpa from about 2.5 mtpa from the Plaquemines plant.
Its 10 mtpa Calcasieu Pass facility, expected to cost about $4.5 billion and begin producing LNG in test mode later this year, has 20-year LNG purchase and sale agreements with Shell, BP, Edison S.p.A., Galp, Repsol and PGNiG.