Under one 20-year deal, CNOOC Gas & Power Group will take 2 million mt/year of LNG on a free-on-board basis from Venture Global’s proposed Plaquemines LNG facility that is planned to be built south of New Orleans. Under a second deal, which will last for a shorter duration that the companies did not disclose, state-owned CNOOC, or China National Offshore Oil Corp, will take 1.5 million mt/year of LNG from Venture Global’s Calcasieu Pass facility that is under construction in southwest Louisiana. Production could begin within weeks at Calcasieu Pass.
The basis of the shorter deal and pricing terms for both deals were not disclosed.
The agreements, announced in a joint statement, add to a flurry of commercial activity between Chinese LNG buyers and US exporters over the last year as high end-user prices in Asia and Europe have spurred buyers to seek out term deals that carry a lower fixed price. Cheap feadgas costs and destination flexibility have made US contracts more appealing in such an environment.
Venture Global and Cheniere Energy have been the beneficiaries of all the Chinese deals with US exporters that have been disclosed so far in 2021, though other US developers are said to be in talks with Chinese buyers.
Earlier in the year, China’s Sinopec and its trading arm, Unipec, agreed to deals with Venture Global covering at least 7.5 million mt/year of LNG supply. Also this year, Cheniere has reached supply deals with China’s Sinochem, an affiliate of China’s ENN Natural Gas and Chinese gas distributor Foran Energy. Cheniere previously signed two long-term contracts with PetroChina for a combined 1.2 million mt/year of LNG. Only a small portion is in effect, with shipments on the balance starting in 2023.
S&P Global Platts assessed the delivered price for LNG into Northwest Europe for February at $48.122/MMBtu on Dec. 20. That was a record high value for DES Northwest Europe. Platts JKM, the benchmark for spot-traded LNG delivered to Northeast Asia, set a record of $56.326/MMBtu on Oct. 6. JKM has been trading recently as a discount to European LNG prices amid high demand and tight inventories on the continent.
Across the Atlantic, the Platts Gulf Coast marker for February was assessed at $45.15/MMBtu on Dec. 20, as US FOB prices continued to track European prices. Record export values for FOB Gulf Coast cargoes have incentivized increased US LNG shipments. US LNG feedgas demand was near a record high level at 12.6 Bcf/d on Dec. 20, based on morning nominations, Platts Analytics data showed.
