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Venture Global, US exporter, secures huge LNG deals with China

Venture Global LNG

Venture Global LNG, a top US liquified natural gas (LNG) exporter, has signed three massive deals with China. The Asian country struggles with rising coal prices and domestic power outages.

Firstly, as we reported previously, the energy crisis in Europe and Asia has China seriously struggling with rising coal prices and power outages. Those led to a halt in industrial activity, which in turn hit big companies like Apple. As natural gas supplies tightened, the world’s second-largest economy considered signing long-term deals with US LNG exporters, such as Venture Global.

According to the Department of Energy’s data, the deals were between Venture Global and Sinopec. Two of them for a 20-year supply of around 4 million tons of LNG per year. The third deal was with Unipec, the trading arm of Sinopec, for 1 million tons of LNG per year.

Moreover, the deals secure Venture Global enough capital potential to advance a final investment decision for its plant in Plaquemines, Louisiana. According to Reuters, Venture Global would announce a FID to build up a 20 million tons per year capacity facility later this year.

On the other hand, for China, the deals are the single largest LNG trade agreement in terms of volumes without an equity stake, a senior Beijing-based gas industry source said. In fact, China has already overtaken Japan as the world’s top LNG buyer.

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Venture Global at the forefornt of China-US LNG deals

In addition, the deals will also double the volumes China imports from the United States. Indeed, the US was the sixth-ranked supplier last year, with volumes at 3.1 million tons.

On the other hand, the first two deals are sales and purchase agreements, according to Reuters. This means that the parties did not specify when the supplies would start. However, the signing of the deals happened last month.

Furthermore, one is specifically for 2.8 mtpa of LNG sold on a free-on-board (FOB) basis; while the other is for 1.2 mtpa sold on a delivered at place unloaded (DPU) basis. The third deal is to supply one mtpa of LNG to Unipec from Venture Global’s Calcasieu Pass Facility for three years, starting March 1, 2023.

Finally, China’s agreement with Venture Global follows an announcement by China’s privately controlled ENN Natural Gas Co for a 13-year deal with US LNG exporter Cheniere Energy. Such a deal was the first major U.S.-China deal since 2018.

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