Malaysia’s LNG giant Petronas has signed a ten-year agreement to supply LNG to a subsidiary of China National Offshore Oil Corporation (CNOOC).
The agreement is for 2.2 million tonnes per annum (mpta) for a ten-year period. It is valued at approximately $7 billion over ten years.
This deal also includes supply from LNG Canada when the facility commences its operations by the middle of the decade. The LNG Canada project will enable Petronas to supply low greenhouse gas (ghg) emission LNG to the key demand markets in Asia.
The agreement is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices. The AECO index is said to be the leading price marker for natural gas in Canada similar to the US 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 2021 following the sale of a spot cargo from Bintulu, Malaysia, to a buyer in the Far East.
Petronas says the deal further strengthens the ongoing relationship established in 2006 and reflects its’ commitment to supporting CNOOC to meet the demand for cleaner energy and support China’s aspiration of peak emissions and carbon neutrality.
“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 .