Beijing Gas in talks over 10-year Shell LNG deal, says source

Beijing Enterprises Holdings

17/02/2022 08:39

By Chen Aizhu
    SINGAPORE, Feb 17 (Reuters) - China's Beijing Gas Group aims
to conclude a 10-year liquefied natural gas (LNG) supply and
purchase deal with Shell  SHEL.L  in the second quarter, a
source with direct knowledge of the talks told Reuters.
    Municipal government-backed Beijing Gas is one of China's
so-called Tier 2 importers behind state energy giants such as
PetroChina  0857.HK  and CNOOC. The Tier 2 players are expected
to lead growth in China's LNG imports for the coming decade.  
    Negotiations began in January, with Beijing Gas seeking 1.5
million tonnes a year of the super-chilled fuel, starting in
2023, in what will be the first long-term LNG contract for the
state-owned piped gas distributor.
    Shell became the first of three suppliers Beijing Gas
short-listed around the end of last year, followed by Qatar
Petroleum and China's CNOOC, the source said. 
    "A deal is expected in the second quarter at the latest,"
said the source, who asked not to be named because the
discussions are not public. 
    Pricing of the gas will be indexed to the Brent crude
benchmark and likely to be lower than the 12% of Brent rumoured
to be under consideration, the source added.  
    Shell declined to comment and Beijing Gas said it could not
comment immediately. 
    The gas will feed into a new terminal in Tianjin, which is
expected to start operating around the end of this year with
capacity of 5 million tonnes a year .
    The 20 billion yuan ($3.16 billion) terminal, to be
connected to Beijing via a 300 km pipeline, is one of the
group's largest investments aimed at providing emergency
supplies and storage for the Chinese capital. 
    Beijing Gas is also discussing similar long-term supplies
with U.S. exporters, the source added without providing further
details. 
    Chinese companies have signed up more than 10 million tonnes
of annual U.S. LNG supply in recent months, enough to help them
to become a major force in global spot trading of LNG.
 urn:newsml:reuters.com:*:nL1N2UO0IU
    Beijing Gas has long been the dominant gas supplier to
Beijing, which burns about 6% of total Chinese gas consumed.
($1 = 6.3341 Chinese yuan renminbi)

 (Reporting by Chen Aizhu
Editing by David Goodman)
 ((aizhu.chen@thomsonreuters.com; Reuters Messaging:
aizhu.chen.reuters.com@reuters.net))