France-based Total said Tuesday it signed a long-term LNG supply deal with China’s Shenergy Group while the duo also created a downstream joint venture.
Total has a 49% stake in the venture while Shenergy Group owns 51%.
The JV would sell Total’s LNG to customers in Shanghai and throughout the neighboring Yangtze River Delta regions, one of the main LNG markets in China, the energy giant said in a statement.
Additionally, Total said it would supply LNG to Shenergy’s unit Shanghai Gas for its distribution business.
Total would source the LNG supply to the JV and Shanghai gas distribution business from its global portfolio through a long-term sale and purchase agreement ramping up to 1.4 million tons per annum for a term of twenty years, it said.
The fuel will land at Shenergy’s Chinese LNG terminals.
“This deal with Shenergy Group is a great opportunity to partner with an experienced gas and LNG player with strong ambitions, as well as a unique entry point into the downstream LNG market in China. This partnership is in line with our strategy to grow along the entire gas value chain,” said Stéphane Michel, president gas, renewables and Power at Total.
He added LNG plays “a key role” in meeting the growing demand for natural gas, especially in China.
“The joint venture with Total will develop the LNG downstream market and support the objective of Shenergy Group to improve the air quality and reduce emissions in the region,” said Wang Zhehong, vice president of Shenergy and chairman of Shanghai Gas.
