An LNG storage facility in Dagang, Hebei province. Sinopec said yesterday it will purchase 2 million tons of LNG per year for 20 years from the ExxonMobil-led Papua New Guinea LNG project. [CFP]
China's largest refiner Sinopec Corp yesterday signed a 20-year agreement to buy liquefied natural gas (LNG) from the ExxonMobil-led Papua New Guinea LNG project, in a move to meet rising domestic demand for energy.
Under the agreement, Sinopec will purchase 2 million tons of LNG per annum for 20 years from the project, the company said in a statement yesterday.
The LNG will arrive at Qingdao in Shandong province, where Sinopec will build a LNG terminal, said the statement.
The first phase of the Shandong terminal will have a capacity of 3 million tons per year. Sinopec plans to expand the facility to 5 to 6 million tons per year in the second phase, said Wang Zhigang, senior vice-president of Sinopec Corp.
"This LNG terminal will provide long-term, reliable and clean natural gas resources to the Shandong market and will play a positive role in meeting the local demand, optimizing the energy mix and improving the local environment," said Wang.
But Sinopec yesterday did not disclose when the terminal would come into operation.
Commenting on the deal, Ron Billings, vice-president, LNG, ExxonMobil Gas & Power Marketing Company said: "We are pleased that the project has completed this important agreement with a key Asian LNG customer."
The deal is Sinopec's first LNG purchase agreement. Analysts said it shows that the company is working to expand its share in the rapidly growing LNG market domestically, which is now dominated by the country's other two oil majors PetroChina and CNOOC.
China's largest offshore oil and gas producer CNOOC is now operating two LNG terminals in Shenzhen in Guangdong and Putian in Fujian. The company's third terminal in Shanghai will soon become operational.
The country's largest oil company is now building two LNG terminals in Liaoning and Jiangsu provinces.
China, which received its first LNG cargo in May 2006, plans to build more than 10 terminals on the east coast to meet a government target to double the use of natural gas in five years by 2010.
CNOOC in November signed an agreement with Qatargas to buy more LNG from the Middle Eastern country. It is considering boosting its annual LNG purchase from the gas-rich country to 7 million tons.
China and Australia struck their biggest trade deal ever in August as the world's two most valuable listed oil companies, PetroChina and ExxonMobil, agreed a $41-billion LNG deal.