Venture Global LNG Inc. has reached a deal to sell nearly 8 million metric tons/year (mmty) of liquefied natural gas (LNG) to China Petroleum & Chemical Corp., aka Sinopec, in deals representing the largest supply agreement ever signed by a U.S. gas exporter.
The 20-year deals, publicly announced on Thursday, also represent the largest supply contracts ever signed by China to import LNG, according to Venture Global. Sinopec is set to purchase 4 mmty from Venture Global’s Plaquemines LNG export terminal under development in Louisiana. Sinopec agreed to purchase 2.8 million mmty on a free-on-board basis and 1.2 mmty on a delivered-at-place-unloaded basis
Few other details were released, but the outline of the Plaquemines agreement was revealed last month in regulatory filings by Venture Global with the U.S. Department of Energy. At a public ceremony Thursday, Venture Global also said it would provide Sinopec subsidiary China International United Petroleum & Chemicals with 3.8 mmty of supplies from its Calcasieu Pass LNG terminal in Louisiana.
Venture Global CEO Mike Sabel said Calcasieu is close to producing its first LNG. Construction on the terminal is complete, and federal regulators have authorized the company to begin commissioning of the first block of smaller, modular liquefaction trains.
“Today’s announcement will accelerate our combined efforts to lower carbon emissions and provide a low-cost, reliable and secure energy supply to China,” Sabel said of the deals. “From Day One, Venture Global has been on a mission to drive fuel switching around the world from coal to natural gas, and we are thrilled to equip Sinopec with a large supply of U.S. LNG to do that and assist China in its energy transition.”
The agreements would double imports of U.S. LNG in China. Sabel added that Venture Global would become the largest U.S. LNG exporter to the country at a time when its natural gas consumption is driving global market growth.
The nation is hungry for natural gas as it battles through a global shortage to fuel a resurgent economy and stave off future power shortages that it’s grappled with in recent months. Aggressive fuel switching and policies aimed at curbing climate change are also driving LNG demand in China.
Privately held Venture Global has already started initial construction work at the Plaquemines site, about 20 miles south of New Orleans. The company has yet to take a final investment decision on the 20 mmty project. However, Sabel said Thursday he expects the company to sanction the terminal in the coming months.
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