Total has delivered its first cargo of carbon neutral LNG to China National Offshore Oil Corp.’s (CNOOC) Dapeng terminal.
The company loaded the LNG at Australia’s Ichthys plant. Total delivered the cargo on September 29 to the Chinese terminal.
“We are proud to have completed this first shipment of carbon neutral LNG with CNOOC, a long-standing partner of Total. This first LNG shipment, whose carbon emissions have been offset throughout the value chain, represents a new step as we seek to support our customers towards carbon neutrality,” said Total’s president for gas Laurent Vivier.
“The development of LNG is essential to meet the growth in global demand for energy while reducing the carbon intensity of the energy products consumed.”
Total offset the carbon from the LNG shipment through the financing of emissions certificates. The company supported the Hebei Guyuan wind power project, which provides an alternative to coal-fired power in northern China, and the Kariba REDD+ forest protection project. The latter aims to protect Zimbabwe’s forests, Total said.
Total is the second largest player in the LNG industry. The company sold more than 34 million tonnes of LNG in 2019 and aims to increase this to nearly 50mn tpy by 2025.
Price discovery
Shell, in June, reported it would provide two carbon neutral LNG cargoes to CNOOC Gas & Power. The company acquired offset credits for forestry plans in China in order to achieve carbon neutrality.
CNOOC was to auction the cargoes through the Shanghai Petroleum and Gas Exchange.
According to the International Group of LNG Importers (GIIGNL), the cost of offsetting can “easily rise” to $10 per tonne of CO2 equivalent for forestry projects. With a conventional cargo having around 250,000 tonnes of CO2e, this could cost $2.5 million, or $0.6 per mmBtu.
However, GIIGNL said, carbon-offset LNG should be seen as a premium product. This allows suppliers to differentiate themselves from the competition.