Wall Street Journal: China National Offshore Oil Corp. is set to sign an agreement with Iran within weeks for 10 million metric tons of liquefied natural gas, two people familiar with the situation said Monday. The Wall Street Journal
Cnooc Would Lock In Enough LNG to feed 3 Import Terminals
By DAVID WINNING
BEIJING — China National Offshore Oil Corp. is set to sign an agreement with Iran within weeks for 10 million metric tons of liquefied natural gas, two people familiar with the situation said Monday.
If concluded, the agreement with the National Iranian Oil Co. would guarantee supplies for three new or expanded LNG terminals in China, or most of the remaining facilities that Cnooc wants to build.
But analysts are skeptical that Iran will be able to secure liquefaction technology to meet its commitment. It has struggled to seal agreements on its natural-gas reserves with foreign investors because of spiraling costs and U.S. sanctions.
For Cnooc, the deal could help prod the National Development and Reform Commission, China’s economic planning agency, into approving the terminals so that the company can begin courting suppliers other than Iran, analysts say.
“Talks with Iran on an agreement are ongoing, but so far we haven’t signed any deal,” Cnooc spokesman Liu Junshan said.
The natural gas would come from Iran’s North Pars project, the people close to the deal said. LNG would be delivered to terminals Cnooc plans to build at Zhuhai in the southern province of Guangdong and Ningbo in the eastern province of Zhejiang. Supplies would also go to a third facility, likely an expansion of a receiving terminal in the southern province of Fujian, which is due to begin operation this year.
“Iran is our target place for sourcing LNG,” said a sales manager with Guangdong Zhuhai Jinwan LNG Corp., which is working with Cnooc in developing the Zhuhai terminal.
The U.S. has exerted pressure on Cnooc to scrap plans to invest in the North Pars gas field. Asserting that Iran hadn’t halted its nuclear program, the U.S. last year said it was “a particularly bad time to be initiating major new commercial deals with Iran.”
Cnooc and Iran signed a memorandum of understanding early last year, and media reports have said Cnooc could invest as much as $16 billion in Iran.
–Renya Peng contributed to this article.