CNOOC agrees to buy two carbon neutral LNG cargoes from Shell

China National Offshore Oil Corporation (CNOOC) subsidiary CNOOC Gas & Power has signed an agreement to purchase two cargoes of liquefied natural gas (LNG) with offset carbon emissions from Royal Dutch Shell.

CNOOC intends to auction these two cargoes on the Shanghai petroleum and natural gas exchange (SHPGX) to provide downstream gas users with the opportunity of decarbonising the use of their energy.

The deal marks China’s first gas imports of this kind, Reuters reported.

Shell Energy EVP Steve Hill said: “We are very excited and humbled to be working alongside our trusted partner CNOOC in bringing the first carbon neutral LNG cargoes to the Chinese mainland. We are particularly pleased to be able to also use credits from projects in China for China.

“Using nature-based credits in conjunction with LNG is a unique solution to support the needs of Chinese gas customers looking to decarbonise their energy use.”

SHPGX will supervise the transaction, performance guarantee, as well as settlement arrangements.

CNOOC Gas & Power chairman Wu Wenlai said: “As the largest LNG importer in China, CNOOC aims to provide reliable, sustainable, safe, green and low-carbon energy product. We are very delighted to work with our trusted partner Shell for delivering the first carbon neutral LNG in Chinese Mainland through this innovative solution.

“Credits used to offset emissions for this LNG are also from local projects and besides combating climate change, will help guard our clear waters and green mountains and eliminate poverty.”

Carbon neutral liquefied natural gas typically involves companies that support nature-based projects, which help in curbing emissions generated from exploration and production (E&P) activities.

In April this year, Shell reduced its first-quarter dividend as revenue decreased by 28% to $60.0bn. Its dividend has been cut from $0.47 per share (Q1 2019) to $0.16 (Q1 2020), representing a 66% decline.