Chinese company Beijing Gas is in talks with Shell over an LNG deal

Beijing Gas Group of China negotiations with Shell will sign an agreement on the supply and purchase of liquefied natural gas (LNG) in the second quarter of 2022, according to Reuters, citing a source who is directly familiar with the matter.

Supported by Beijing Gas municipal government, which began talks last month, it is looking to Shell for 1.5 million tons of supercooled fuel a year.

A potential ten-year deal could be the first long-term LNG contract for a state-owned pipeline gas distributor. If the negotiations are successful, the agreement will be valid from 2023.

The news agency, citing a source, said: “The deal is expected no later than the second quarter.”

Shell plans to supply LNG to a new terminal in Tianjin worth $ 3.16 billion (20 billion yuan). The terminal with a capacity of 5 million tons per year is scheduled to be commissioned in late 2022.

The terminal must be connected to Beijing via a 300km pipeline to provide emergency supplies and storage in the region.

Beijing Gas is also in talks with undisclosed U.S. exporters about similar long-term supplies.

In recent months, several Chinese companies have signed LNG supply deals for more than ten million tons of annual LNG supplies from the United States.

Shell was one of three suppliers shortlisted for Beijing Gas in 2021. Other firms were Qatar Petroleum and Chinese CNOOC.

Last month Shell has resumed talks with UK offshore regulators over the development of the Galka gas field in the North Sea.

Previously, the company planned to extract and burn unnecessary CO₂ from gas on the Shirwater platform. The resulting purified gas was to be transported ashore via a new pipeline.

Despite this, the plan was later rejected by the Offshore Oil Regulator for the Environment and Decommissioning (OPRED).

Related companies Chinese company Beijing Gas is in talks with Shell over an LNG deal

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