Historic Agreement to Supply LNG to China
Woodside Energy Group Ltd., an Australian energy giant, has secured a landmark agreement with China Resources Gas International to supply liquefied natural gas (LNG) to China. This deal marks the first binding LNG supply contract between Chinese and Australian companies in several years. Under the terms of the agreement, Woodside will deliver approximately 600,000 tons of LNG annually for 15 years, beginning in 2027. The LNG will be provided on a delivered basis, ensuring a steady and reliable supply to one of China’s major gas distributors.
This historic contract is significant as it marks Woodside Energy first long-term standalone sale agreement with a Chinese customer. Mark Abbotsford, Woodside’s Executive Vice President & Chief Commercial Officer, expressed his enthusiasm for the milestone, highlighting its importance in strengthening the company’s presence in the Asian market. Abbotsford noted that this is also the first time China Resources has committed to procuring LNG over such an extended period, demonstrating the Chinese firm’s confidence in Woodside’s capabilities as a reliable LNG supplier.
The agreement comes at a critical time, as Chinese gas companies are showing reluctance to purchase additional gas from the United States. This hesitation follows Beijing’s recent decision to impose tariffs on American fuel imports, making Australian LNG an attractive and strategic alternative.
A Renewed Energy Partnership Amid Shifting Relations
The deal also symbolizes a notable thawing of diplomatic and trade tensions between China and Australia, which have strained in recent years. Relations between the two nations hit a low point in 2020 when then-Prime Minister Scott Morrison pushed for an independent investigation into the origins of the COVID-19 pandemic. This stance led to a series of retaliatory measures from Beijing, including halting plans to buy more fuel from Australia.
In 2021, China imposed tariffs on Australian wine and placed restrictions on coal, metals, and agricultural products, severely impacting Australian exports. However, in a positive turn of events, Beijing lifted the levies on wine three years later, signaling a gradual improvement in bilateral ties.
Woodside Energy new LNG deal with China Resources is seen as a positive development in rebuilding economic and energy cooperation between the two countries. It reflects China’s willingness to diversify its energy sources while strengthening business relations with Australia after years of strained ties.
China Resources Prepares for LNG Import Growth
China Resources Gas International, one of China’s largest city gas distributors, is set to benefit significantly from the new agreement. The company’s Rudong LNG terminal, located in Jiangsu Province, is currently under construction and is expected to be operational by early 2026. Once completed, the terminal will play a pivotal role in handling the LNG shipments from Woodside, bolstering China’s energy security and meeting the growing demand for cleaner energy sources.
The partnership between Woodside Energy and China Resources marks a strategic step for both companies in the evolving global LNG market. As China continues to expand its natural gas infrastructure, securing long-term, stable supplies is crucial. The 15-year agreement not only supports China’s energy transition but also reaffirms Woodside’s commitment to strengthening its footprint in the lucrative Asian energy market.
