BP signs deal with China Suntien Green Energy to supply gas to northern China

Oil major BP and China Suntien Green Energy signed a joint venture contract on 21 July to set up a trading company to supply natural gas and LNG to northern China, BP China said in a statement later the same day.

"We are delighted to break new ground in the northern region, one of China's most economically dynamic regions, based on our strategy to build an integrated domestic gas value chain," BP's senior vice president of integrated gas and power Federica Berra said.

BP has strong trading capabilities from its rich downstream market presence in southern China, which will complement Suntien's natural gas infrastructure in the northern regions, she added.

"As a leading clean energy supplier in North China, the establishment of the gas trading joint venture with BP will help enrich the composition of Suntien's resource pool, enhance the company's influence in the industry, and further ensure natural gas supply in the Beijing-Tianjin-Hebei region and its surrounding areas," Mei Chunxiao, president of Suntien Green Energy said in the statement.

BP's investment in China's natural gas market goes back to 2006, with a 30% share in China's first LNG receiving terminal project -- the Shenzhen Dapeng LNG terminal in southern China -- which has an LNG receiving capacity of 7 million mt/year.

With the rapid development of China's natural gas market in recent years, BP has been expanding its presence to supply more natural gas to the Chinese market.

The company signed four gas supply contracts with second-tier Chinese gas distributors in 2021, with a total contract volume of 1.25 million mt/year.

These include BP Singapore's sale and purchase agreement with Guangzhou Development Group in July 2021 for the supply of 650,000 mt/year of LNG to the latter's subsidiary, Guangzhou Gas over 2022-2034.

In October 2021, BP also signed a 10-year agreement with Shenzhen Gas to supply up to 300,000 mt/year of natural gas via pipeline from southern China's Shenzhen Dapeng LNG receiving terminal starting January 2023.

BP in December 2021 signed a sale and purchase agreement with a subsidiary of China's State Power Investment Corp. for supplying 200,000 mt/year of pipeline natural gas to the southern Guangdong province for a period of 10 years starting from 2023.

In the same month, it also signed a 10-year pipeline gas supply deal with Guangdong Foshan local government-owned Foran Energy, and deliveries will start from April 1, 2023, lasting through to Dec. 31, 2032.

China Suntien Green Energy is a Hebei provincial government-controlled natural gas distributor and wind power producer, which is building an LNG receiving terminal at Caofeidian in Tangshan city, in the northern part of the province.

The project, which will be divided into three phases and has a total LNG handling capacity of 12 million mt/year, comprises two berths capable of receiving LNG carriers of 80,000-266,000 cu m and 20 LNG storage tanks with a capacity of 200,000 cu m each.

The first phase of the Caofeidian LNG project, with an LNG handling capacity of 5 million mt/year, comprising one LNG receiving berth and four LNG storage tanks, is scheduled to start operations by the end of 2022.

Suntien on December 8, 2021, announced it would sign a sale and purchase deal with Qatar Liquefied Gas for 1 million mt/year of LNG for 15 years, which is expected to begin delivery around end-2022 to 2023, S&P Global Commodity Insights reported earlier.

Besides, Suntien is also building a 176-km natural gas pipeline that connects the Tangshan LNG terminal with other trunk natural gas pipelines such as the China-Russia natural gas pipeline's eastern route and Shaanxi-Beijing natural gas pipeline in the country.

Currently, only state-owned PetroChina operates an LNG terminal in Tangshan, which has a total nameplate LNG receiving capacity of 10 million mt/year.