Total is set to supply of up to 1.4 million tonnes per year (mtpy) of liquefied natural gas (LNG) to China’s Shenergy Group for a 20-year term. The pair will also form a joint venture to expand LNG marketing in China.
The joint venture (Total 49%, Shenergy Group 51%) will sell LNG, supplied by Total, to customers in Shanghai and throughout the neighboring Yangtze River Delta regions, one of the main LNG markets in China, the French major said yesterday. Additionally, Total will supply LNG to Shanghai Gas, the natural gas subsidiary of Shenergy Group, for its distribution business.
“This deal with Shenergy Group is a great opportunity to partner with an experienced gas & LNG player with strong ambitions, as well as a unique entry point into the downstream LNG market in China. This partnership is in line with our strategy to grow along the entire gas value chain,” said Stéphane Michel, president gas, renewables & power at Total. “LNG is playing a key role in meeting the growing demand for natural gas, especially in China where we are pleased to contribute to the diversification of the energy mix.”
“The Shenergy Group is very pleased to sign this partnership agreement with Total, which secures a long-term, reliable supply of LNG for the Yangtze River Delta. The Joint Venture with Total will develop the LNG downstream market and support the objective of Shenergy Group to improve the air quality and reduce emissions in the region,” said Wang Zhehong, vice president of Shenergy Group and chairman of Shanghai Gas.
The LNG supply to the JV and Shanghai gas distribution business will be sourced from Total’s global LNG portfolio through a long-term LNG sale and purchase agreement ramping up to 1.4 mtpy for a term of twenty years. It will be delivered to Shenergy’s Chinese LNG terminals.
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