BP plc has started to link downstream customers in China with liquefied natural gas (LNG) imports, creating a fully integrated supply chain in a country that continues to lead the world in energy consumption growth.
The first LNG cargo delivered under BP’s new terminal usage agreement arrived over the weekend at the Guangdong Dapeng LNG Co. Ltd. (GDLNG) import facility in Shenzhen. Under the agreement, the London-based supermajor has 600,000 metric tons/year (mty) of tolling regasification capacity at GDLNG, where it holds a 30% interest.
The cargo arrived after separate deals were signed last year with utilities ENN Group and Foran Energy to supply each company with 300,000 mty of pipeline gas from the import terminal for two years beginning in 2021.
BP was the first international oil and gas company to invest in an operating Chinese LNG import terminal. The supply deals it signed with ENN and Foran strengthened its foothold in the country, where BP explores and produces, as well as is involved in petrochemicals and energy trading.
China has in recent years unveiled various policies to enhance energy reform and attract investment. According to BP’s 2020 Statistical Review of World Energy, China was the biggest driver of energy, accounting for more than 75% net global growth.
BP noted that the gas value chain it has created in the country positions it to take advantage of China’s plans to utilize more of the fuel as it aims to cut emissions and become carbon neutral by 2060.
Coal-to-gas switching among consumers has remained strong in the country and partly helped to drive a historic rally in Asian LNG prices earlier this month as demand spiked amid a supply deficit.
Morgan Stanley analysts said in a report Monday that natural gas demand in China is still on pace to grow in the high single digits through 2025, supported by the government’s environmental initiatives.
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