Sinopec inks LNG deal with Australia
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Sinopec yesterday signed a deal with Australia Pacific LNG Pty Ltd to buy 4.3 million tons of liquefied natural gas annually for 20 years and the Chinese firm is also set to be an equity partner of the project.
The pact, with deliveries of the cleaner burning fuel expected to start in 2015, will help China reduce reliance on oil and coal.
Financial terms were not revealed, but the deal represents the largest LNG supply agreement in Australian history by annual volume, according to Grant King, managing director of Origin Energy, which equally owns Australia Pacific LNG with US partner ConocoPhillips.
An estimated value of A$90 billion (US$97 billion) for the supply pact was a "ballpark" figure, King said in Brisbane.
Conoco and Origin also agreed to sell a 15 percent stake in Australia Pacific LNG to Sinopec for US$1.5 billion. The Australia Pacific LNG project includes the development of substantial coal seam gas resources in Surat and Bowen basins in southeast Queensland for 30 years.
The transaction is subject to approval from authorities in China and Australia and is conditional on Australia Pacific LNG reaching a final investment decision.
"This will help Sinopec diversify its natural gas supply and meet the rapidly increasing demand of customers in China," said Zhang Yaocang, vice president of Sinopec, adding the firm continues to look for more cooperation opportunities in Australia.
Sinopec plans to build a 17 billion yuan (US$2.6 billion) LNG receiving terminal in the port city of Beihai in southern Guangxi Zhuang Autonomous Region for the LNG supply, which could also be channelled to other LNG import and gasification terminals in China, an Origin statement said.
Industry consultant Wood Mackenzie last year forecast China's annual LNG imports to rise five-fold to 46 million tons in 2020.
In the first quarter, China's gas imports more than doubled to 6.3 billion cubic meters, or 18.8 percent of domestic gas demand. About half of the imports were LNG.
