BP plc. has signed a first-of-its-kind deal with one of China’s largest privately-owned energy companies to supply LNG and regasify it at an import terminal.
Under the supply agreement, BP would provide 300,000 metric tons of regasified LNG to ENN Group for two years beginning Jan. 1, 2021. The LNG would be received and regasified at an LNG receiving terminal in Southern China’s Guangdong Province where BP holds regasification capacity.
BP’s Dev Sanyal, executive vice president of gas and low carbon energy, said the deal marks the first time an international energy company would regasify LNG through a Chinese terminal and also directly supply gas to customers via pipeline.
“Our strategy is to integrate energy value chains and, with this transaction, we have created an innovative model that integrates upstream gas resources, transportation and trading, into downstream markets in China,” Sanyal said.
LNG would arrive at Guangdong Dapeng LNG Co. Ltd.’s (GDLNG) receiving terminal in the coastal province. BP has a 30% stake in GDLNG, which has delivered 50% of the Guangdong region’s natural gas consumption over the last decade.
China is the world’s second largest LNG importer. According to BP’s 2020 Statistical Review of World Energy, global natural gas consumption grew by 2% in 2019, with a 54 billion cubic meter (Bcm) increase in LNG exports. The strong growth was boosted by China, where the country’s LNG imports rose by 11.3 Bcm, making it the largest increase in a single country.
China has in recent years unveiled various policies to enhance energy reform and attract investment. According to BP’s review, the country was by far the biggest driver of energy, accounting for more than three quarters of net global growth. Global gas production grew by 3.4% last year and China was also among the key contributors to upstream gains, with 16 Bcm of additional volumes.
ENN Chairman Wang Yusuo said the deal with BP would not only provide its customers with more resources, but also strengthen energy industrial reform and development in the country.
ENN has upstream, midstream and downstream operations. It operates more than 200 city gas projects and provides gas services to more than 20 million households and 149,000 industrial and commercial operations.
For BP, the deal strengthens its foothold in the country, where the company already engages in oil and gas exploration and development, petrochemicals, and oil and gas trading, among other things.
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