Top Chinese energy companies are in advanced talks to secure long-term LNG contracts with US exporters as the country battles against severe power crunch, Reuters reported, citing people familiar with the discussions. The sources said Sinopec, CNOOC, and Zhejiang Energy are among Chinese firms in discussions with US LNG suppliers such as Cheniere Energy and Venture Global. They estimate the talks to result in contracts worth tens of billions of dollars.
The talks started early this year but accelerated recently after natural gas prices in Asia jumped more than fivefold since January. Fresh deals are expected to be announced within the next few months. That will revive US LNG exports to China, which had been dampened by a trade war between the two countries. It remained hard to estimate the total amount of the expected deals. However, sources said Sinopec could be eyeing LNG supplies of 4 million tons/year from 3 to 4 US exporters.
Trading sources said some buyers were regretting that they did not sign enough long-term contracts, which exposed them to the recent violent market turbulence. Some Chinese provinces are rationing power as prices of LNG and other power-generating fuel such as oil and coal soared to multi-year highs, stoking fears of power shortages in the winter. Chinese energy buyers are scrambling for available cargoes to meet demand this winter, competing with buyers from Europe and other Asian countries.
