HomeNewsChina Gas Holdings Secures LNG Supply Deals with Venture Global for 40-Year Term

China Gas Holdings Secures LNG Supply Deals with Venture Global for 40-Year Term

2/24/2023

(Reuters) — China Gas Holdings, one of China's largest independent gas distributors, has agreed to two 20-year LNG supply contracts with U.S. exporter Venture Global, adding to a flurry of deals signed between China and the U.S. since 2021.

China Gas Holdings, via its wholly owned subsidiary China Gas Hongda Energy Trading Co., would buy a total of two million tonnes per year of LNG from Venture Global under the two contracts, the company said in a statement. Supply would begin in 2027, a company executive told Reuters.

The LNG would come from two Venture Global projects in Louisiana — Plaquemines LNG and the CP2 LNG. China Gas said it would receive 1 million tonnes of LNG annually from each project.

Venture Global, founded by a former energy lawyer and investment banker, has rocketed to the top ranks of LNG developers with its ability to obtain financing and rapidly build plants as rivals struggled. Its Calcasieu Pass plant was producing LNG 29 months after receiving a financial go-ahead.

Like most U.S. LNG export deals with China, the contracts were agreed on a free-on-board basis and their prices were linked to the U.S. benchmark Henry Hub gas market, the company executive said. The terms allowed buyers flexibility to either bring in the fuel to China or trade in the global market.

Europe has been the major beneficiary of China cutting its LNG imports in 2022, as the gas-starved continent has been able to buy both spot cargoes that China didn't take and some contracted cargoes that China re-sold.

However, the country, home to the world's fastest-growing market for the seaborne fuel, has signed a flurry of long term 20-25 year contracts with global producers, especially in the United States in 2022, with Chinese buyers alone accounting for 40% of such contracts among global players.

This would make it harder for Europe to secure enough LNG in the long term, as it will have to compete with Asian players for the supply, which will remain limited until 2027, according to analysts.

China Gas Holdings signed a deal with U.S. firm Energy Transfer in June to receive 0.7 million tonnes of LNG a year on a free-on-board basis for 25 years. Deliveries are expected to begin in 2026.

Venture Global has about 70 MTPA of LNG export capacity in operation, construction or development in Louisiana, including the 10-MTPA Calcasieu (operation and construction), 20-MTPA Plaquemines (construction), 20-MTPA Delta (development) and 20-MTPA CP2 (development).

In 2021, Venture Global also signed several large deals with firms in China, which imported more LNG in that year than any other country. It signed a 20-year deal with state oil giant Sinopec to supply 4 million tonnes of LNG a year and further agreed to provide 3.8 million tonnes a year to Unipec, a subsidiary of Sinopec.

Also in 2021, Venture Global signed a 20-year deal to sell 2 million tonnes of LNG a year to a unit of China National Offshore Oil Corp. (CNOOC).

The company executive said China Gas owned no regasification terminal in China but could lease receiving facilities from the dominate state firms and those operated by national gas infrastructure major PipeChina.

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