Chinese oil company Sinopec is in talks with Pembina Pipeline for an LNG offtake agreement and equity stake in the Cedar LNG project, Reuters reported, citing undisclosed sources.
Cedar LNG, a partnership between Haisla First Nation and Pembina, is a proposed floating LNG facility in Kitimat, British Columbia.
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The nearly $4bn Cedar project is expected to produce 3mt of LNG annually after its projected completion in 2028, with a final investment decision anticipated by mid-2024.
Sinopec is discussing the purchase of half of Cedar LNG’s production from Pembina’s share, the sources said.
Sinopec did not comment on the news, the report said.
Meanwhile, a representative for Cedar and Pembina said: “Commercial negotiations with multiple other customers continue to progress as Pembina plans to assign its capacity to a third party.”
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By GlobalDataLast month, the Cedar project announced that it had secured separate 20-year offtake agreements with ARC Resources and Pembina for 1.5mt each.
The talks with Sinopec come after a period of reduced global investment in upstream oil and gas by the company, following the oil price downturn in 2014/15 and increased financial scrutiny by Beijing.
Sinopec is seeking to diversify its worldwide portfolio due to the slowing growth of oil consumption and the rising use of gas in China.
The company is investing in refining and petrochemical projects in countries such as Sri Lanka and Saudi Arabia, as well as gas ventures in Qatar and Canada.
Sinopec’s interest in Canadian LNG is not new. The company has been looking to capitalise on gas assets it acquired from Petronas in 2014, which include gas fields in north-eastern British Columbia, the sources said.
Sinopec’s Canadian ambitions were initially tied to the Pacific Northwest LNG project, also owned by Petronas, but the plans for the LNG facility were abandoned in 2017.
“It is a logical strategy for Sinopec to look at both equity investment and gas offtake in Cedar LNG, though the priority is to monetise the upstream gas assets as local Canadian gas prices are too low,” the source was quoted as saying.
In November 2023, Sinopec secured deals with QatarEnergy, which included two 27-year contracts for a combined 7mt of LNG annually.
