Chinese gas player secures long-term LNG from Mexico

China’s town gas distributor Zhejiang Energy (Zheneng) has reached agreement with Mexico Pacific to import liquefied natural gas from Mexico.

The sales and purchase agreement (SPA) will commit Zheneng to offtake 1 million tonnes per annum of LNG from Mexico Pacific’s anchor export facility — Saguaro Energia — located in Puerto Libertad, Sonora, Mexico.

Under the agreement, Zhejiang Energy will purchase volumes on a free-on-board (FOB) basis over a term of 20 years, Mexico Pacific said.

Mexico Pacific’s 14.1 million tpa Saguaro Energia LNG Facility leverages low-cost natural gas sourced from the nearby Permian basin.

In addition to the recent deal with Mexico Pacific, Zheneng has also concluded at least two long-term SPAs with international LNG sellers. One is with ExxonMobil for 1 million tpa for 20 years, while the other is with Russian LNG major Novatek for similar volumes for 15 years from its Arctic LNG 2 project.

Zheneng is a key gas player in eastern China’s Zhejiang province, with gas sales last year hitting 15 billion cubic metres.

Article continues below the advert

The company is in a joint venture with Shenzhen Energy and Liuheng Beach Company to build an LNG receiving terminal at Liuheng Island in Zhejiang province with capacity of 12 million tpa.

The project will be built in three phases. In the first phase, the facilities will include a jetty capable of handling LNG carriers with capacity of 266,000 cubic metres as well as three LNG tanks, each with capacity of 200,000 cubic metres.

The company has just completed construction of an import terminal in Wenzhou city in Zhejiang province, which will eventually handle 6.34 million tpa of LNG.