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China's Sinopec secures gas from Exxon Mobil in PNG

4 December 09 05:47 GMT
By Chris Hogg
BBC News, Shanghai

China's second biggest oil and gas company has secured a 20-year supply of gas from Papua New Guinea.

It is the latest in a series of moves by Chinese companies to secure resources to feed the country's growing economy.

Sinopec, which is owned by the Chinese government, will buy around 2m tonnes of liquefied natural gas each year.

The LNG supply will come from a project being developed by Exxon Mobil and other investors.

When cold weather came to China earlier than usual this year, gas shortages were reported in several parts of the country.

Only the timing was unusual. There are similar problems every year.

Energy hunger

China's economy is expected to grow 8% in 2009.

That pace of growth puts increasing pressure on supply of resources like oil and gas.

This deal will help Sinopec to meet the demand from its customers, the company says.

The gas will be chilled to a liquid in Papua New Guinea and shipped to a port in eastern China where it will be converted back and piped to where it is needed.

Earlier this year another big Chinese energy company, PetroChina Limited, secured a similar deal to buy $41bn (£24.8bn) worth of natural gas from Australia. It is not clear yet how much PetroChina is paying to secure this new supply.

Chinese companies have signed contracts to import oil and gas from the Gulf, Africa, Central Asia and elsewhere.

They are often prepared to consider deals that firms from Western countries might not be so interested in, either because of political considerations, or other logistical difficulties.

Analysts point out that as supplies of oil and gas become more scarce, the Chinese, relatively late entrants into the global effort to secure dwindling resources, often have little choice but to deal with whoever is prepared to talk to them.

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