Malaysian company Petronas signs 10-year LNG supply agreement with CNOOC worth $ 7 billion

KUALA LUMPUR, July 7 (Reuters) – Malaysian state oil company Petronas has signed a 10-year liquefied natural gas (LNG) supply agreement with a subsidiary of Chinese offshore oil and gas company CNOOC Ltd (0883. HK) worth around $ 7 billion. , the firm announced on Wednesday.

Petronas, or Petroliam Nasional Berhad (PETR.UL), said the deal with CNOOC Gas and Power Trading & Marketing Limited is for 2.2 million tonnes per year over a 10-year period.

“This long-term supply agreement also includes the supply of LNG Canada when the facility begins operations by mid-decade,” Petronas said in a statement.

The deal is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices, he said.

AECO is a natural gas price benchmark in Canada, similar to the Henry Hub index in the United States, but is not generally used as a pricing basis for LNG spot contracts.

In Asia, S&P Global Platts’ Japan-Korea-Marker (JKM) is increasingly used as a pricing basis in spot contracts.

Petronas signed its first shipment of LNG using the AECO index to a buyer in the Far East in May.

The deal with CNOOC reflects the receptiveness of the markets and the recognition of AECO indexed LNG in the world’s largest LNG market, said Shamsairi M. Ibrahim, Petronas vice president of LNG marketing and trade.

Reporting by Mei Mei Chu, editing by Louise Heavens

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