British Petroleum [BP:US] has signed a ten-year supply agreement with a subsidiary of China’s State Power Investment Corp (SPIC) to provide the latter with up to 200,000 tons of piped natural gas per year from 2023, as reported by S&P Global on December 16. BP will transport liquefied natural gas (LNG) to the gas receiving stations in Guangdong Province. SPIC’s subsidiary, Guangdong Dapeng Liquefied Natural Gas (Dapeng LNG), operates the gas receiving terminal, which supplies around 50% of the natural gas consumption in Guangdong Province. BP owns a 30% share of the Guangdong Dapeng LNG Terminal.

Dapeng LNG is China’s first LNG import terminal, while BP was the first international oil company in China to invest in an operational LNG terminal. The recent collaboration came amid China’s market-oriented reform in the oil and gas sector, which allows private and even foreign capital to invest in the sector dominated by state-owned enterprises (SOEs). According to SPIC, the partnership with BP represents a crucial first step to developing its international gas trading business. Moreover, the two parties seek more in-depth collaborations in gas trade, integrated smart energy, overseas energy projects, and carbon emission reduction. According to the Statistical Review of World Energy by BP, the share of natural gas in primary energy has hit a record high of 24.7% in 2021. BP stated that the proportion would continue to grow over the next 15 years, as major carbon emitters, including China and India, control coal use and turn towards lower-carbon fuels.

Sources:

https://www.spglobal.com/platts/en/market-insights/latest-news/lng/121621-bp-signs-10-year-piped-gas-supply-deal-with-chinas-state-power-investment-corp

https://finance.sina.com.cn/money/future/roll/2021-12-16/doc-ikyamrmy9392452.shtml

https://www.gem.wiki/Guangdong_Dapeng_LNG_Terminal

https://www.rfa.org/english/commentaries/energy_watch/china-revives-oil-and-gas-reform-plan-03112019105451.html

https://www.bp.com/en/global/corporate/energy-economics/statistical-review-of-world-energy.html