Total signs LNG supply agreement with China’s Shenergy Group

French major Total has signed a long-term LNG supply agreement with Shenergy Group, a state-owned enterprise owned by the Shanghai government in China.

Under the binding agreement, Total will supply up to 1.4 million tonnes of LNG annually to Shenergy Group.

The two parties also agreed to establish a joint venture (JV) to expand LNG marketing in the Asian country.

Total will have a 49% stake in the new JV while Shenergy Group will hold the remaining 51% interest.

The JV will be engaged in selling LNG, which will be supplied by Total, to customers in Shanghai and throughout the neighbouring Yangtze River Delta regions.

Total gas, renewables and power president Stéphane Michel said: “This deal with Shenergy Group is a great opportunity to partner with an experienced Gas & LNG player with strong ambitions, as well as a unique entry point into the downstream LNG market in China. This partnership is in line with our strategy to grow along the entire gas value chain.

“LNG is playing a key role in meeting the growing demand for natural gas, especially in China where we are pleased to contribute to the diversification of the energy mix.”

Total also agreed to supply LNG to Shanghai Gas, the natural gas subsidiary of Shenergy Group, for its distribution business.

Shenergy Group vice-president and Shanghai Gas chairman Wang Zhehong said: “The Joint Venture with Total will develop the LNG downstream market and support the objective of Shenergy Group to improve the air quality and reduce emissions in the region.”

Total said that it plans to source the LNG for supply to the JV and Shanghai gas distribution business from global LNG portfolio.