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CALGARY, Alberta: A small-scale Canadian liquefied natural gas (LNG) plant has signed the country's first binding supply agreement with China, ahead of much larger deals expected to be finalised with operators of bigger new terminals.

Privately-owned FortisBC agreed with China's Top Speed Energy Corp to supply 53,000 tonnes from its Tilbury facility in British Columbia as of 2021 for two years.

The deal is small but is a sign of things to come. Terminals with export capacity of 24 million tonnes a year (mtpa) are planned in British Columbia by Royal Dutch Shell, Chevron and Pacific Oil & Gas, targeting Asian buyers.

"There is strong demand for Canadian LNG in China and this is an exciting time to be working in the industry here in B.C," said Douglas Stout, FortisBC vice president of market development.

The company has supplied small-scale cargoes on a spot basis to China since a pilot in 2017.

Singaporean Pacific Oil & Gas has signed non-binding contracts with Chinese buyers CNOOC for 0.75 mtpa for 13 years and Guangzhou Gas Group for 1 mtpa for 25 years from its planned Woodfibre LNG export terminal, also in British Columbia.

PetroChina, meanwhile, is an equity holder in the large 14 mtpa LNG Chanada export facility being constructed by Shell.

Canadian LNG supplies to Asia have become an attractive proposition in light of China's growing appetite for the fuel and British Columbia's proximity across the Pacific, compared with the U.S. Gulf Coast, where far more LNG terminals are being built.

Copyright Reuters, 2019

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