British oil major BP has signed a 10-year gas sales and purchase agreement with Shenzhen Sino-Benny LPG, in the first long-term deal with price indexed to international LNG in China's domestic gas market.

Beginning in 2023, BP will provide the Chinese company with up to 300,000 tonnes of pipeline gas a year, supplied through an LNG receiving terminal of Guangdong Dapeng LNG Company Limited (GDLNG), where BP holds regasification capacity. Sino-Benny is a wholly owned subsidiary of Shenzhen Gas Group Co.

Last year BP signed gas supply agreements with ENN Group and Foran Energy, both in Guangdong, to supply them with pipeline gas re-gasified from LNG. The deal is for two years from 2021.

In January BP began to directly supply these customers with gas from LNG that BP has imported into the country. This was the first time that BP had created a fully integrated gas value chain into China, directly connecting upstream resources, transportation and trading with downstream gas customers. The first cargo of gas delivered under BP’s new terminal usage agreement at the GDLNG import terminal in Shenzhen arrived on January 24.

Those deals were signed before the current energy shortages that threaten to impact the Chinese economy. But even as China ramps up coal production, putting in place more long-term LNG agreements is likely to be high on the government's agenda.

Qatargas Operating Company Limited recently signed a long-term LNG sale and purchase agreement between Qatar Petroleum and CNOOC Gas and Power Trading & Marketing Limited, a subsidiary of China National Offshore Oil Corporation (CNOOC).

As of August 2021, Qatar had delivered a total of 715 LNG cargoes to China, of which 270 cargoes (more than 24 million tonnes of LNG) were delivered to CNOOC.

The newly signed agreement provides for the supply of 3.5 million tonnes per annum of LNG over a 15-year period from January 2022. A cross-regional team of lawyers from Norton Rose Fulbright advised Qatargas on the agreement.