Petronas expects the deal to strengthen the ongoing relationship with CNOOC. Credit: zhao chen on Unsplash.

Petronas LNG (PLL), a subsidiary of Malaysia’s oil and gas company Petronas, has signed a deal valued at around $7bn to supply LNG to China National Offshore Oil Corporation’s (CNOOC) subsidiary CNOOC Gas and Power Trading & Marketing.

The ten-year deal involves the supply of 2.2 million tonnes per annum (MTPA) that is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices.

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Additionally, it includes the supply of low greenhouse gas (GHG) emission LNG from LNG Canada, which is due to be commissioned in the middle of this decade.

Petronas LNG marketing and trading vice-president Shamsairi M Ibrahim said: “Importantly, it reflects the markets’ receptiveness and recognition of AECO indexed LNG into the world’s largest LNG market; as we seek to grow the use of LNG as a cleaner and cost-effective form of energy.”

Petronas said that the deal strengthens the ongoing relationship with CNOOC, as well as its commitment to help companies meet the increasing demand for cleaner energy.

In a press statement, the Malaysian firm said: “The agreement with CNOOC, China’s largest LNG importer, reflects PETRONAS’ commitment to ensure security of supply through an established transparent and stable price index such as AECO in the LNG market, while providing additional pricing options for its customers.”

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The deal follows the signing of a memorandum of understanding in March 2021 between Petronas and CNOOC for closer collaboration.

Both firms agreed to collaborate in LNG, upstream exploration and development projects, refining, oilfield and engineering services, speciality chemicals, lubricants, and renewable energy.