Origin signs LNG supply deal

Gas project operator strikes five-year supply deal with China’s ENN.

Origin signs LNG supply deal

Origin Energy, operator of Australia’s newest gas-export facility, has struck a deal to supply a subsidiary of Chinese natural gas distributor ENN Energy Holdings.

Origin said Tuesday it had signed a nonbinding pact with ENN LNG Trading for the supply of 500,000 tonnes of liquefied natural gas for a period of five years.

The value of the deal wasn’t disclosed, although Origin said a binding agreement is expected to be concluded during the second half of 2016 and would give the two companies the ability to extend the supply period by another five years.

Origin said it had the flexibility to supply ENN from its portfolio of operations as well as gas bought from third parties, when market conditions created an opportunity to lower supply costs.

The Australia Pacific LNG project, jointly owned by Origin and partners including ConocoPhillips and China Petrochemical Corp., began producing LNG late last year. LNG is natural gas chilled until it becomes a liquid, which makes it easier to store and transport.

Origin said deliveries to ENN are expected to begin in 2018 or 2019, after the completion of ENN’s Zhoushan receiving terminal in China’s Zhejiang province.