BP, China's Shenzhen Gas inks 10-year pipeline gas supply agreement

Oil major BP has signed a 10-year agreement with Shenzhen Sinobenny LPG Co., Ltd, a wholly owned subsidiary of Shenzhen Gas, to supply up to 300,000 mt/year of pipeline natural gas starting January 2023, BP said late Oct. 20 on its WeChat platform.

This is the first pipeline natural gas supply agreement in mainland China under which settlement prices are linked to international LNG prices, BP said, without disclosing the detailed pricing formula.

The natural gas will be delivered to Shenzhen Sinobenny via pipeline from southern China's Shenzhen Dapeng LNG receiving terminal, which BP owns a 30% share and currently has an LNG regasification capacity of 600,000 mt/year, according to BP.

"We look forward to working closely with Shenzhen Gas to provide high-quality supplies to help meet China's growing energy demand," Federica Berra, BP's senior vice president of integrated gas and power, said.

"The current global and domestic energy situation is undergoing profound changes. The cooperation between Shenzhen Gas and BP under the context of achieving carbon peak and carbon neutrality targets is of great strategic significance," Li Zhen, Chairman of Shenzhen Gas said.

Shenzhen Gas is a Shenzhen government-controlled city gas and LPG distributor, which has the right to operate pipeline gas in 57 cities across 13 provinces, with a total annual natural gas sales volume of 3.8 billion cubic meters, information posted on the company's website showed.

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 continued to seek new cooperation opportunities with Chinese companies, providing more natural gas to the China market, it added.

BP signed a natural gas purchase and sale agreement with ENN Group on July 9, 2020, under which BP agreed to supply ENN with 300,000 mt/year of pipeline gas for two years in Guangdong province starting Jan. 1, 2021.

In the same month, BP signed another natural gas purchase and sale agreement with Guangdong's Foran Energy on July 21, 2020, also supplying the latter with 300,000 mt/year of pipeline gas for two years starting Jan. 1, 2021.

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