PETRONAS and CNOOC Sign 10-Year LNG Supply Agreement
This long-term supply agreement also includes supply from LNG Canada when the facility commences its operations by middle of the decade.
The deal is for 2.2 million tonnes per annum (MTPA) for a
10-year period, indexed to a combination of the Brent and Alberta Energy
Company (AECO) indices. The term deal between PETRONAS and CNOOC is valued at
approximately USD 7 billion over ten years.
“PETRONAS is proud to strengthen our decade long
relationship with CNOOC through this term LNG supply. Importantly, it reflects
the markets’ receptiveness and recognition of AECO indexed LNG into the world’s
largest LNG market; as we seek to grow the use of LNG as a cleaner and cost
effective form of energy,” said PETRONAS Vice President of LNG Marketing &
Trading, Shamsairi M. Ibrahim.
The AECO index, housed on the ICE NGX commodity exchange
platform, is one of the most liquid spot and forward energy markets in North
America. It is the leading price marker for natural gas in Canada similar to
the United States’ Henry Hub, which is the benchmark for natural gas prices
used as an indexation to LNG prices. PETRONAS introduced the AECO index to its
customers in May this year following the sale of a spot cargo from Bintulu,
Malaysia, to a buyer in the Far East.
The agreement with CNOOC, China’s largest LNG importer,
reflects PETRONAS’ commitment to ensure
security of supply through an established transparent and stable price index
such as AECO in the LNG market, while providing additional pricing options for
its customers. Once ready for operations, the LNG Canada project paves the way
for PETRONAS to supply low greenhouse gas (GHG) emission LNG to the key demand
markets in Asia.
The deal also further strengthens the ongoing relationship
established since 2006 and reflects PETRONAS’ commitment in supporting the
endeavor of CNOOC and its associated companies to meet the fast-growing demand
for cleaner energy and support China’s national aspiration of peak emissions
and carbon neutrality.
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