China Petrochemical Corporation (Sinopec) announced Friday that it has signed a heads of agreement with Australia Pacific LNG Pty Ltd (Australia Pacific LNG) establishing non-binding key commercial terms for the supply of up to 4.3 million tonnes per annum of liquefied natural gas (LNG) for 20 years.
According to the agreement, Sinopec will also get a 15 percent stake in Australia Pacific LNG, and thereby reducing both ConocoPhillips and Origin Energy stakes in Australia Pacific LNG to 42.5 percent each.
Under the agreement, Australia Pacific LNG and Sinopec intend to incorporate the agreed-upon non-binding key commercial terms into binding agreements in the near future.
The Australia Pacific LNG project is based on coal seam gas reserves and resources in Queensland, with the first LNG cargo expected to be delivered in 2015, according to a statement released by Sinopec.
Su Shulin, President of Sinopec, said that the deal will help Sinopec diversify its natural gas supply and meet the rapidly increasing customer demand for the gas in China.
China has seen rapid growth in demand for natural gas in recent years. According to statistics of the National Energy Administration (NEA), China's natural gas consumption rose by over 20 percent in 2010 to 110 billion cubic meters with imports of LNG up 75 percent to 9.34 million tonnes. The NEA also predicted that natural gas consumption will rise by some 20 percent to 130 billion cubic meters in 2011.
Australia Pacific LNG is a joint venture between Origin Energy Limited and ConocoPhillips. The Australia Pacific LNG project includes the development of Australia Pacific LNG's substantial coal seam gas resources in the Surat and Bowen Basins over a 30-year period, a 450 km transmission pipeline, and a multi-train LNG facility on Curtis Island, near Gladstone.
Sinopec is China's second largest crude oil and natural gas producer, China's largest petroleum products and chemicals producer and supplier.
