Malaysian energy giant Petronas has, under its subsidiary Petronas LNG, secured a 10-year term deal to supply liquefied natural gas (LNG) to CNOOC Gas and Power Trading & Marketing Limited, a subsidiary of China National Offshore Oil Corporation (CNOOC).
During the 10-year agreement, 2.2 million tonnes per annum (MTPA) will be delivered from Petronas to CNOOC and is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices.
Worth $7bn, the long-term supply agreement also includes supply from LNG Canada when the facility begins operating by the middle of the decade.
Commenting on the deal, Shamsairi M. Ibrahaim, Vice President of LNG Marketing & Trading, Petronas, said, “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.”
Petronas introduced the AECO index to its customers in May this year, as the index, housed on the ICE NGX commodity exchange platform, is one of the most liquid spot and forward energy markets in North America.
With a strong reputation, AECO is the leading price marker for natural gas in Canada and bears similarities to the United States’ Henry Hub, a benchmark for natural gas prices used as an indexation to LNG prices.
The agreement will ensure a secure and reliable supply through a transparent and stable price indexing system. In addition, the LNG Canada project will allow Petronas to supply low greenhouse gas emission LNG to key Asian markets