BP signed a long-term LNG sale and purchase agreement with China's Zhejiang Energy Group at the 29th World Gas Conference on May 21, BP China announced via its official WeChat platform on May 22.

The agreement is for the supply of 1 million mt/year of LNG to Zhejiang Energy from BP's portfolio on a DES basis for a duration of 10 years, BP said.

The cooperation marks another important milestone following the establishment of a joint venture between BP and Zhejiang Energy to conduct LNG sales in China, signaling that the strategic partnership between the two parties has entered a broader phase of development, BP added.

Market sources said the contract is linked to oil prices with a slope of less than 12%, and the cargoes will be supplied solely to China.

Prior to the WGC2025, a source with direct knowledge of the matter told Platts that an agreement would be reached at the specified price level. Platts is part of S&P Global Commodity Insights.

A BP spokesperson declined to comment further on commercial details. Zhejiang Energy was not immediately available for clarification.

BP and Zhejiang Energy formed a joint venture focused on selling trucked LNG in the Chinese market in 2023. The SPA marks Zhejiang Energy's fourth long-term LNG purchase deal.

In addition to BP, Zhejiang Energy has also signed agreements with ExxonMobil, NOVATEK and Mexico Pacific to secure LNG supplies.

Zhejiang Energy's deal with ExxonMobil is for the purchase of 1 million mt/year of LNG over 20 years, with deliveries starting in July 2022. However, deliveries under the deals with NOVATEK and Mexico Pacific have not commenced due to various reasons.

Zhejiang Energy currently operates the 3-million-mt/year Wenzhou LNG receiving terminal in Zhejiang Province, eastern China.

Apart from the Wenzhou LNG terminal, Zhejiang Energy also holds a 29% stake in the 6-million-mt/year Ningbo LNG terminal, which is currently operated by CNOOC.

Additionally, Zhejiang Energy has partnered with Shenzhen Energy on the Liuheng LNG terminal project, which is still under construction.