Eric Watkins
Oil Diplomacy Editor
LOS ANGELES, Nov. 25 -- Shell Eastern LNG has agreed to sell as much as 2 million tonnes/year of LNG to PetroChina International under a 20-year purchase and supply agreement.
Shell said LNG supplies will come from various company projects, including Western Australia's Gorgon gas project, in which Shell holds 25% interest.
Shell did not outline when deliveries of supplies would begin or detail any other projects that might provide supplies.
The current agreement builds on one signed in November 2007 under which Shell was to supply 1 million tpy of LNG to PetroChina, which is building three regasification facilities on China's Pacific seaboard: one in Jiangsu province, one in Dalian city, and a third in Tangshen city.
According to analyst BMI, PetroChina's decision to double the volume under the final contract demonstrates the Chinese firm's confidence in ongoing strong demand for LNG in China.
In addition, the analyst said, the increased supply may reflect PetroChina's desire to source more long-term LNG supply contracts from Asia Pacific as a less risky strategy than boosting LNG imports from the Middle East, "particularly as the upsurge in piracy increases transit risks and shipping costs along the route."
Earlier this month, China and Myanmar signed an agreement for the supply of gas that also came amid growing concerns about the safety of shipping through the Malacca Strait, especially following the rise of hijackings and attacks on oil tankers by Somali pirates operating in and around the Gulf of Aden (OGJ Online, Nov. 20, 2008).
