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Sinopec to review LNG deal terms with Cheniere

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LNG Industry,

Reuters is reporting that Sinopec is set to review the terms of a potential US$16 billion LNG supply deal with Cheniere Energy.

Sinopec (China Petroleum & Chemical Corp) is predicted by many to be the next major Chinese buyer of US LNG. Until recently, a long-term deal between the company and the US’ largest LNG producer was not expected until the trade tensions between the US and China had reached a truce, however declines in LNG prices have accelerated negotiations.

While sources close to the negotiations maintain it is still uncertain what the outcome will be, it appears that the current price levels in the LNG market are incentivising Sinopec to pursue a deal sooner rather than later. On the other side of the table, Cheniere also have an incentive to sign a deal, in light of the LNG supply glut which is looming on the horizon, which low-cost producers, such as Qatar, will surely be large contributors to.

There is still the matter of renegotiations over price and delivery terms, not to mention the 25% Chinese trade tariff on US imports which is still in full effect, but progress towards a new US-China LNG supply deal, however gradual, would seem to be being made.

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