China Secures Two Long-Term LNG Deals With U.S. Producer

March 15 -- A Chinese company has sealed two 20-year LNG purchase deals with Venture Global, which will see the latter supply two million tons of liquefied gas to China Gas Holdings annually, beginning in 2027.

The gas will come from Venture Global’s two projects in Louisiana, Reuters has reported, Plaquemines LNG and CP2 LNG. The Plaquemines LNG facility, currently in construction, will have a capacity of 20 million tons annually when completed. CP2 LNG will also have a nameplate capacity of 20 million tons, with peak capacity of 24 million tons, Venture Global said in a fact sheet.

The two contracts with China Gas Holdings add to one it signed with Energy Transfer for the supply of 700,000 tons of LNG annually over a period of 25 years, amid a rush among Chinese energy buyers to secure a long-term supply of liquefied gas.

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Reuters notes that for Venture Global this is the third recent deal with a Chinese company: last year, the LNG developer signed one 20-year contract with state-owned energy major Sinopec for the delivery of 4 million tons of LNG annually, and another, with a Sinopec subsidiary, for the delivery of another 3.8 million tons per year.

China specifically, and Asia as a whole, is being watched by LNG producers as one certain demand growth region, alongside Europe. China is of special interest because, unlike many other Asian economies, it can afford LNG, even at current prices. These are down from last year’s highs but are still higher than before Russia invaded Ukraine.

According to one LNG tanker operator, prices will continue trending higher until 2025, driving U.S. LNG investment because of the arbitrage between global and local prices.

The CEO of Flex LNG said he expected Henry Hub prices to rise from below $3 per mmBtu now to some $5 by 2025, while Europe’s TTF benchmark and the Asian Japan-Korea Marker top $20 per mmBtu before retreating to $15, according to a conference call cited by Natural Gas Intelligence.