Zhenhua puts forward a buyout offer for first LNG cargo from Chevron

The state-run China-headquartered Zhenhua Oil, the oil exploration & production subsidiary of Norinco, the Chinese defence contractor, has bought its vey first LNG cargo from Chevron Corporation.

If reports are to be believed, the oil  exploration company has put forth the buyout offer in order to supply LNG to a South China-receiving terminal for which it recently won access through an auction.

Sources familiar with the knowledge of the matter claim that the cargo, of capacity 100 million cubic metres, had been purchased at about US$0.30/M British thermal unit discount to the JKM (Japan Korea Marker) quotes on a delivered basis.

Apparently, the cargo, which had been discharged at CNOOC’s (China National Offshore Oil Corporation) Yuedong terminal located in Shenzhen, had been sourced from the Australian Gorgon project which was operated by Chevron.

Reliable sources claim that Zhenhua Oil, in tandem with its local partner – Longkou, had agreed, in September to pay an amount of US$26.5 million to officially obtain permission to use the CNOOC facility.

The offer apparently, had been made at the first such auction, as the renowned second-biggest LNG buyer across the globe expands its limits to open up its LNG import business that is dominated by the top three state oil conglomerates.

A source from Zhenhua Oil has stated that the company is on the lookout for more such spot purchases, and in addition, also seems to be considering securing LNG via long-term contracts. However, this would majorly depend on the long-term access to import infrastructure.

Authentic reports claim that Zhenhua’s move is rather commonplace among buyers who import LNG through third-party access at most of China’s state-owned terminals, solely on account of the fact that they lack access to the pipeline distribution network, owing to which they are required to distribute the entire cargo through trucks.

Source: OilVoice