China's state-owned Sinopec will offer LNG on an ex-terminal basis through the Shanghai Petroleum and Natural Gas Exchange (SHPGX) on July 9, making it the third of the three state-owned oil firms to use the exchange as a platform for downstream sales in the domestic market.
CNOOC has offered LNG import terminal slots on SHPGX, while PetroChina has offered pipeline gas deliveries from its term contracts as part of a push to help open China's oil and gas sector. China is pushing to liberalise downstream gas pricing as means to provide more affordable gas resources that will bolster its battle against air pollution.
Sinopec will offer imported LNG received at its 3mn t/yr Beihai terminal, based in the southern Guangxi province, on the SHPGX. The firm is targeting local consumers, as well as distributors in southern China that buy LNG on an ex-terminal basis and deliver it by truck to customers not connected to the gas grid. The volume of LNG that Sinopec is offering to sell on the exchange is unclear.
Sinopec has a 2mn t/yr long-term supply contract with the 6.9mn t/yr ExxonMobil-operated PNG LNG plant in Papua New Guinea (PNG) and a 7.6mn t/yr contract with the 9mn t/yr Australia Pacific LNG plant. It started receiving an additional 450,000t of LNG from PNG LNG under a four-year contract with ExxonMobil that started in April. It operates the Beihai, Qingdao and Tianjin LNG import terminals in China.
The exchange will accept bids from 9am to 11.30am and from 2pm to 3pm local time in China on 9 July. Sinopec has set the minimum bid at 3,200 yuan/t ($9.10/mn Btu), with the minimum tradable volume set at one truck of 20t LNG.
Bidders are required to pay a deposit equivalent to 10pc of the transaction value on top of a commission fee of 0.005pc charged by the exchange.
This suggests they know how much they intend to buy before they bid. Successful bidders will have to offtake at least 80pc of the purchased LNG during 10-31 July, or within 22 days of the transaction, from the Beihai terminal.
The volume of gas in the first half of the year on the SHPGX doubled to 26.7bn m³ from the same period a year earlier, out of which LNG accounted for 4.87mn t (7.2bn m³). Traded volumes of piped natural gas reached 19.5bn m³ in the first half, up by 17.82pc from the same period a year earlier.
