Total, the world’s second largest private LNG player, and China National Offshore Oil Corp. (CNOOC) signed an amendment this week to their existing sale and purchase agreement (SPA) on LNG supplies, Total said on October 22. The French company will now provide 1.5 million tpy of LNG from its portfolio to the Chinese company, up from 1 million tpy.
The two sides also extended the contract term from 15 to 20 years. The initial long-term LNG SPA was signed in 2008.
Total’s president of gas, Philippe Sauquet, said the company was “delighted to strengthen our partnership with CNOOC to expand our presence in the Chinese LNG market, which grew by 50% over the first half of 2018 and will continue to drive the increase of LNG demand over the next decade”.
Last week, energy consultancy Wood Mackenzie said Chinese LNG demand had grown by 8 million tonnes in 2017 and would grow by another 12 million tonnes this year, making up more than 50% of global LNG demand growth. Given China is only partly through its five-year clean energy transition, the China LNG demand growth story is far from over, the Wood Mackenzie report added.
Total’s disclosure comes just days after the France-based company announced that it had signed what it called “an agreement to jointly develop multi-energy offers to the Indian energy market with Adani Group,” an Indian multinational conglomerate. The agreement will allow the two companies to serve the fast growing gas demand of the Indian market.
The companies will jointly develop various regasification LNG terminals, including Dhamra LNG, on the East coast of India. The two companies also agreed to work together on building a service station network.
Asia-Pacific is set to drive LNG demand growth, WoodMac said, predicting this would reach 337 million tpy by 2030. Deals by Total to work with incumbents in this region, therefore, appear to be a good means of gaining access to this growth.