Royal Dutch Shell PLC, Europe's biggest oil company, had agreed to sell an annual 2 million tones of liquefied natural gas (LNG) to China in a 20-year agreement, Shell (China) Limited said yesterday.

The agreement was signed between the European oil giant and PetroChina International Co., a wholly-owned subsidiary of PetroChina Company Limited (PetroChina), China's largest oil and gas producer.

The Chinese company was not immediately available to verify the news.

Part of the LNG supplies to PetroChina would be tapped from the Gorgon gas project in western Australia, the European company said. Shell has a 25 percent stake in the Gorgon project that is still in initial stages of development.

In April, PetroChina also signed agreements with Qatargas and Shell to purchase 3 million tonnes of LNG per annum from a Qatargas project in Qatar. PetroChina is building two LNG terminals in the northeast port city of Dalian and in Rudong of east China's Jiangsu Province.

China's thirst for clean energy had boosted the demand for natural gas, and also the interest of oil giants in building LNG projects.

The Australian North West Shelf project, in which Shell is also a participant, also supplies 3.3 million tonnes of LNG annually toChina's Guangdong LNG terminal, operated by the country's largest offshore oil and gas producer -- China National Offshore Oil Corp (CNOOC). The first cargo of LNG from the project was delivered to China in May 2006.

CNOOC also has contracts to import LNG from other countries, including a 25-year contract of 2.6 million tonnes per annum from Indonesia for its Fujian project, 3 million tonnes per annum from Malaysia for its Shanghai project and 2 million tonnes annually from Qatar.

The country has set a target of raising the proportion of natural gas in its total energy consumption to 5.3 percent in 2010from 2.8 percent in 2005, amid efforts to curb pollution. Currently, coal accounts for about 70 percent of China's total energy consumption. Experts predicted that by 2020 China would import 10 million tonnes of LNG annually.

The country produced 69.31 billion cubic meters of natural gas last year, up 23.1 percent year on year. The country's natural gas output is expected to reach 76 billion cubic meters this year.

(Xinhua News Agency November 25, 2008)