Vitol/Petronas deal has LNG Canada smiling
LNG Canada, the $30 billion liquefied natural gas (LNG) export project, has bagged another client after project shareholder Petronas signed an initial sales deal with trading house Vitol.
Royal Dutch Shell decided in October to construct the export terminal. It was the first major investment decision in a new North American LNG export project for two years and was expected to launch a new wave of such projects in the region.
Petronas, the Malaysian oil and gas company that bought a 25 per cent stake in the project in May, will supply Vitol with 0.8 million tonnes per year (mtpa) of LNG starting from 2024 for 15 years, Vitol said in a statement.
“The primary supply to Vitol will come from LNG Canada as well as from (Petronas’) other global LNG supply portfolio,” Vitol told Reuters.
Vitol joins Asian utilities Tokyo Gas, Toho Gas and Korea Gas Corp (Kogas) as buyers, committing to offtake around 2.4 mtpa collectively.
Such long-term agreements normally underpin project finance and are critical before a final investment decision is taken.
But because Shell and partners Petronas, PetroChina, Mitsubishi and Kogas are such large players in the LNG market, they can absorb the output into their global portfolios without needing to find significant other buyers.
Under previously announced deals, Toho Gas will buy 0.3 mtpa, Tokyo Gas 0.6 mtpa and Kogas 0.7 mtpa from LNG Canada.