Chevron has agreed to a five-year LNG supply deal with China’s JOVO, the super-major said last week, adding that the first shipment would be delivered in 2018.
Chevron said its wholly owned subsidiary, Chevron USA, had signed a key terms agreement with JOVO unit Singapore Carbon Hydrogen Energy for the delivery of 500,000 tonnes per year of LNG from Chevron’s global supply portfolio. The frozen gas will be delivered to JOVO’s Dongguan LNG terminal in Guangdong Province.
Privately owned JOVO supplies gas to industrial and power plant users as well as motorists through a chain of refilling stations. In addition to urban gas pipelines, the company delivers LNG, LPG, methanol and DME via a fleet of trucks.
Commenting on the deal, Chevron’s executive vice president for midstream and development, Mike Wirth, said: “This agreement is another important step in the commercialisation of Chevron’s natural gas holdings. We are positioned to become one of the top 10 LNG suppliers in the world.”
The agreement with Chevron comes after JOVO extended its long-term supply deal with Malaysia’s state-owned Petronas in May. Petronas said at the time that the deal would “ensure a stable and significant increase of LNG supply to JOVO up until at least 2023 as the company seeks to expand its downstream market to meet end-users’ demand in China.”
In 2014, Qatargas agreed to sell LNG to JOVO, the state company’s first such agreement with an independent Chinese importer.
The Beijing government has thrown its weight behind gas consumption as a means of lowering the country’s dependency on coal. China hopes to increase gas’ share of the primary energy mix from around 6% in 2015 to 10% by 2020.
However, a new report this week has highlighted the domestic pressures facing both private and state LNG importers. Interfax, citing data from Shandong-based SCI International, said Chinese LNG prices had fallen to their lowest level since 2009 in the January-June period. Softer demand had driven down the average ex-works price of LNG sold by Chinese liquefaction plants by 25% year on year to 3,087 yuan (US$483.7) per tonne.