Venture Global LNG and China Petroleum and Chemical Corp. (Sinopec) recently announced that the companies will be signing two 20 year Sales and Purchase Agreements (SPA) for the supply of around 4 million tonnes per annum of LNG. The LNG will be supplied by Venture Global’s Plaquemine LNG export facility in Plaquemine Parish Louisiana, USA. In addition to the above agreements, UNIPEC which is a subsidiary of Sinopec agreed to buy 3.5 million tonnes of LNG from Venture Global’s Calcasieu Pass LNG facility for a shorter duration.
The deal represents the largest single LNG supply deal ever signed by a US company and will result in doubling of LNG imports from USA to China. This will also make Venture Global the largest exporter of LNG in the USA.
The announcement is also targeted at the combined efforts of both the companies towards lower carbon emissions, and providing a low cost, reliable, and secure energy supply to China. Venture Global has been striving for driving fuel switching from coal to natural gas and this deal will also help in making this transition possible in China also.
Venture Global is a long term low cost provider of US LNG which is sourced from resource rich North American Natural Gas Basins. Venture Global is currently expanding its export facilities in Louisiana to supply LNG globally. Sinopec is a major oil and gas company in China. It is the world’s largest oil refiner and second largest chemical company.
LNG is liquified Natural Gas which is used as a clean fuel for energy requirements worldwide. The global demand for LNG stood at around 360 million tonnes in 2020 and is expected to grow at a CAGR of 8% during the upcoming years till 2030. The demand is expected to double by 2040 to around 700 million tonnes globally.
As per ChemAnalyst, “the deal between Venture Global and Sinopec which is one of the largest deals ever done in the LNG market represents a rise a global LNG demand which is growing due to high clean energy requirements around the world especially in China. The deal is also expected to have an effect on the prices of LNG both in the USA and China. With the supply increasing in China, the prices of LNG will tend to stabilize.”