Asia Pacific

China signs $1.6bn Yamal deal

CNPC ... partner in Russia’s Yamal LNG project

A subsidiary of Chinese state oil giant China National Offshore Oil Corporation (CNOOC) has signed an around $1.6 billion deal to build equipment for a liquefied natural gas project in Siberia, the company said.

Under the agreement, CNOOC’s Offshore Oil Engineering Co will build “core modules” for the liquefication process on the project in Yamal in the Russian Arctic, according to a statement posted on CNOOC’s website (www.cnooc.com.cn).

Novatek, Russia’s second-largest gas producer, is developing the $27 billion Yamal LNG project with France’s Total and China’s top energy group, state-owned China National Petroleum Corporation (CNPC).

The first production unit, with annual capacity of 5.5 million tonnes, is due to be launched in 2017.

In May, CNPC signed a deal to buy 3 million tonnes of LNG per year from the Yamal project, as did Russia’s Gazprom.  CNPC also agreed in May to buy 38 billion cubic meters of gas per year from Russia’s Gazprom, in a deal unofficially valued at $400 billion.

BP will also sign a deal worth around $20 billion (11.78 billion pounds) to supply China National Offshore Oil Corporation (CNOOC) with liquefied natural gas (LNG), chief executive Bob Dudley said at a conference in Moscow.

“It is a 20-year supply agreement on LNG. It is a fair price for them and a fair price for us. It is a good bridge between the UK and China in terms of trade,” Dudley said.

BP will likely source much of the LNG from its US export plant at Freeport, Texas, where it owns 3 million tonnes per year (mtpa) of export capacity, having started negotiations with CNOOC earlier this year.

The deal, expected to boost China’s LNG intake by at least 1.5 million tonnes per year, or about 26 cargoes, cements China’s role as a key buyer of US gas, industry sources said.