Malaysia’s state-owned Petroliam Nasional Berhad, aka Petronas, has struck a $7 billion liquefied natural gas (LNG) supply deal with China National Offshore Oil Corp. (CNOOC) that includes cargoes from the LNG Canada facility currently under construction in British Columbia.
Under the terms of the deal, Petronas would supply 2.2 million metric tons per year (mmty) of LNG to CNOOC for a term of 10 years. The supplies are to be indexed to a combination of the Brent crude and Canadian AECO natural gas benchmarks.
Petronas Vice President of LNG Marketing & Trading Shamsairi M. Ibrahim said the deal “reflects the markets’ receptiveness and recognition of AECO-indexed LNG into the world’s largest LNG market.”
The announcement comes as long-term LNG supply deals are seen rebounding as spot prices have been on the rise.
Petronas, a partner on the Royal Dutch Shell plc-led LNG Canada project, announced earlier this year it had made its first spot LNG sale indexed to AECO. Petronas has also recently beefed up its holdings in the Montney Shale to source supply for LNG Canada, which is expected to enter service by the middle of the decade.
Global LNG buyers are increasingly on the lookout for LNG supplies with lower greenhouse gas (GHG) emissions profiles, and CNOOC is no exception. Last year, the company took delivery of a carbon-neutral cargo from TotalEnergies SE and signed an agreement to purchase two others from Shell.
Petronas said the LNG Canada development “paves the way” to supply low-GHG emission LNG to “the key demand markets in Asia.”
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