China Petroleum and Chemical Corp (Sinopec) has signed a 15-year deal with TotalEnergies for 2 million metric tons of liquefied natural gas (LNG) annually from 2028, which is expected to further bolster TotalEnergies' foothold in China's energy market and advance the country's clean energy goals, industry experts said.
Sinopec signed the LNG sales agreement with TotalEnergies on Monday, under which TotalEnergies will supply approximately 2 million tons of LNG per year to Sinopec for 15 years starting in 2028.
The agreement with Sinopec, one of the leading LNG players in the country, is part of the company's strategy to grow its LNG business and strengthen its long-term position in the LNG market in China, said TotalEnergies.
This agreement comes within the strategic cooperation agreement signed earlier this year between the two companies, it said.
An analyst said the sales agreement between TotalEnergies and Sinopec will help the latter better cement its presence in China, the world's largest LNG importer and a key player in global energy transition.
This agreement not only enhances TotalEnergies' long-term revenue stability in Asia but also positions it as a competitive force in a region with increasing demand for cleaner energy alternatives, said Lin Boqiang, head of the China Institute for Studies in Energy Policy at Xiamen University.
For China, LNG plays a crucial role in balancing renewable energy's intermittency and replacing coal in power generation, thereby reducing greenhouse gas emissions. This collaboration with Sinopec underscores TotalEnergies' strategic pivot toward environmentally sustainable energy solutions, advancing its global energy portfolio while supporting China's energy transition efforts, he said.
In China, natural gas is a key component of the energy transition as it mitigates the intermittency of rapidly growing renewable energies and helps reduce greenhouse gas emissions when it replaces coal in electricity production.
Sinopec sees TotalEnergies as a crucial partner in the company's natural gas strategy and this agreement will further strengthen their strategic cooperation in the gas sector, said Niu Shuanwen, vice-president of Sinopec.
This agreement further strengthens cooperation between the two companies in natural gas. Natural gas is an important enabler for realizing China's energy transition and dual carbon goals, Niu said.
