China's Sinopec signs 15-year LNG term contract with TotalEnergies

French oil major TotalEnergies on Monday announced the signing of a long-term LNG supply contract with China’s Sinopec, under which Total will supply Sinopec 2 million tonnes of liquefied natural gas (LNG) annually for a 15-year period, beginning 2028.

The agreement safeguards the long term interests of both TotalEnergie, one of the world’s leading energy suppliers and China, the world’s largest energy consumers.

TotalEnergies and Sinopec had, earlier this year, signed a strategic cooperation agreement during President Xi Jinping’s state visit to France. 

For China, natural gas is a key to its energy transition from fossil fuel to green energy to keep its economy steady as industries replace coal with LNG.

China’s annual LNG imports rose 12.4 per cent to 72.1 million tonnes in 2023 and this is expected to be higher this year and in subsequent years.

The agreement will also help Sinopec build up its clean energy -portfolio while remaining an oil and gas company.

For TotalEnergies the deal ensures a long-term market for LNG in energy-hungry Asia, amidst the ongoing global transition to renewable energy.

TotalEnergies, the world’s third largest LNG producer, with natural gas liquefaction facilities across geographies, has a total capacity to produce 44 million tonnes annually.

The company has set a target of achieving 50 per cent share for natural gas in its product mix by 2030.