CNOOC speeds up LNG arm
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China National Offshore Oil Corp (CNOOC), the country's largest oil and gas producer, is speeding up the development of its liquefied natural gas (LNG) business as part of its focus on green energy.
The company earlier inked a deal with French utility GDF Suez to purchase a total of 2.6 billion tons of LNG in four years starting from 2013.
According to the deal, the LNG, from Suez's vast portfolio of natural gas holdings, will be delivered to any of CNOOC's three LNG terminals in Guangdong, Fujian and Shanghai, said Jean-Marie Dauger, GDF Suez's executive vice-president.
"CNOOC is very pleased to sign this medium-term agreement with GDF Suez. This new contract will help the company diversify its supply sources and contribute to energy saving, emission reduction and the development of the low-carbon economy in China," said Wang Jiaxiang, assistant president of CNOOC Gas and Power Group.
Although GDF said it could not provide a dollar value for the deal, the equivalent of 44 LNG cargoes at the request of CNOOC, sources from CNOOC said the deal is worth more than $1 billion.
The deal came amid major Chinese State-owned oil companies' efforts to intensify the competition in buying energy overseas and clinching more access to overseas resources to power its booming industries.
LNG, as a cleaner substitute for coal, will help China reduce its carbon emissions and clear its obscure and polluted skylines, said Qiu Xiaofeng, an industrial analyst from China Merchants Securities.
According to Qiu, China plans to raise the portion of LNG among its total energy consumption from 4 percent to 8 percent during the five years from 2011 to 2015, which requires an annual growth rate of 20 percent. "Considering the nation's limited domestic output, the best way to meet the goal is to import supplies," Qiu said.
"China is a core market to us, (as China) will become an extremely important actor in terms of LNG development in the next decade," said Grard Mestrallet, chairman and chief executive officer of GDF Suez.
"This year, China's imported LNG will account for 10-plus percent of total energy consumption," said Wang Weigang, an analyst from Northeast Securities.
The global average rate of LNG consumption among all kinds of resources averages at 24 percent, while China's current rate is at 4 percent, he said.
China's LNG import reached 1 million tons in August, more than double the amount year-on-year, Reuters reported.
China plans to import 25 million tons of LNG annually, said the National Development and Reform Commission.
British industrial research and consulting company Wood Mackenzie Ltd also raised its forecast of China's LNG demand to 46 million tons, up 48 percent from its former expectation of 31 million tons.
Despite having secured about 16 million tons of annual LNG supplies, CNOOC is seeking strategic partners for more LNG supplies, said Wang Jiaxiang from CNOOC. The country's leading offshore oil producer plans to bolster its annual LNG purchase from Qatar to 7 million tons from the current 5 million tons a year.
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