BP signs 10-year piped gas supply deal with China's State Power Investment Corp

BP has signed a sale and purchase agreement with a subsidiary of China's State Power Investment Corp. for supplying 200,000 mt/year of pipeline natural gas to the southern Guangdong province for a period of 10 years starting from 2023, BP's China unit said on its social media account late Dec 15.

Under the agreement, BP will provide SPIC Guangdong Co. with pipeline gas sourced from the LNG receiving terminal of Guangdong Dapeng Liquefied Natural Gas Co.

State Power Investment Corp. is one of China's largest state-owned generation utilities, and the contract signals a move toward direct procurement of its gas supply from private industry players, as opposed to relying on national oil companies for energy supply.

An increasing number of companies outside the three big NOCs -- Sinopec, PetroChina and CNOOC -- are entering the gas business, with many leveraging on their size and stronger creditworthiness to sign long-term gas deals.

"It is an important first step for SPIC to promote the development of its international natural gas trading business using the Hengqin Guangdong-Macao Deep Cooperation Zone as a platform," Chen Xi, chief accountant of State Power Investment Corp., said.

"Closer and in-depth exchanges and cooperation will be conducted in natural gas trade, integrated smart energy, overseas energy projects, and global carbon emission reduction," he said.

The Chinese government is building the Guangdong-Macao deep cooperation zone in Hengqin, located in the southern part of Zhuhai city in Guangdong Province, adjacent to Macao, to boost the region's economy and expand the growth potential of the relatively small Macao region.

BP was the first international oil company in China to invest in an operational LNG terminal with its 30% share of the Guangdong Dapeng LNG terminal, which accounts for about 50% of Guangdong's natural gas consumption.

BP started supplying gas from LNG imports directly to its customers in China in January 2021.

In October, the international oil major signed a 10-year agreement with a subsidiary of Shenzhen Gas to supply up to 300,000 mt/year of pipeline natural gas starting January 2023.

BP signs 10-year piped gas supply deal with China's State Power Investment Corp