Interfax-China reported that China Petroleum & Chemical Corp has signed an agreement to buy 2 million tonnes of liquefied natural gas a year from ExxonMobil Corp.

The LNG for the deal which was signed between Sinopec subsidiary Unipec Asia Co Ltd and ExxonMobil subsidiary Esso Highlands Ltd will be supplied by the PNG LNG project in Papua New Guinea. Esso Highlands has a controlling stake in the project.

The LNG shipments will feed Sinopec LNG terminal in Qingdao, Shandong Province.

A gas analyst with a foreign energy company who wished remain anonymous, estimated that the LNG shipments will be priced between USD 9 and USD 10 per million British thermal unit.

Sinopec had planned to build an LNG terminal in Qingdao in 2005 but was unable to secure a source of LNG which stalled development in the project. Sinopec has since fallen behind its domestic rivals, China National Petroleum Corp and China National Offshore Oil Corp in the LNG business.

The analyst said "An agreement with Exxon Mobil allows Sinopec to get approval from the National Development and Reform Commission to start construction on the Qingdao terminal."

(Sourced from Interfax-China)