Total partners with Shenergy on LNG supply to China

French major Total on Tuesday said it has signed an LNG supply deal with China’s Shenergy Group.

Under the binding agreement, Total will deliver up to 1.4 million tons of LNG per year to the Chinese company. Additionally, the pair have agreed to establish a joint venture to expand LNG marketing in China.

The joint venture, to be owned 49 per cent by Total and 51 per cent by Shenergy Group, aims to sell LNG, supplied by Total, to customers in Shanghai and throughout the neighboring Yangtze River Delta regions, one of the main LNG markets in China.

Additionally, Total will supply LNG to Shanghai Gas, the natural gas subsidiary of Shenergy Group, for its distribution business.

“This partnership is in line with our strategy to grow along the entire gas value chain,” said Stéphane Michel, president Gas, Renewables & Power at Total. “LNG is playing a key role in meeting the growing demand for natural gas, especially in China where we are pleased to contribute to the diversification of the energy mix.”

“The Joint Venture with Total will develop the LNG downstream market and support the objective of Shenergy Group to improve the air quality and reduce emissions in the region,” Wang Zhehong, vice president of Shenergy Group and chairman of Shanghai Gas added.

The LNG supply to the JV and Shanghai gas distribution business will be sourced from global LNG portfolio of Total through a long-term LNG sale and purchase agreement ramping up to 1.4 million tons per annum for a term of twenty years. It will be delivered to Shenergy’s Chinese LNG terminals, the statement reads.