CNOOC sells access to LNG terminal as China opens up vast energy market

BEIJING (Reuters) - China’s CNOOC sold access to its Yuedong liquefied natural gas (LNG) terminal to state-owned Zhenhua Oil and private logistics firm Longkou Shengtong Energy, its first such auction as the country pushes to liberalize its vast oil and gas market.

The logo of China National Offshore Oil Corp (CNOOC) is pictured at its headquarters in Beijing, China April 4, 2018. Picture taken April 4, 2018. REUTERS/Stringer

In the auction on the Shanghai Petroleum and Gas Exchange, Zhenhua Oil and Longkou agreed to pay CNOOC Gas and Power Group 0.265 yuan ($0.04) to CNOOC per cubic meter of imported LNG for access to the terminal, Zhenhua Oil, a subsidiary of Chinese defense conglomerate Norinco, said in a statement.

The total value of the deal was 26.5 million yuan ($3.87 million).

CNOOC has also sold LNG in auctions on the Shanghai bourse this year but this is the first time it has auctioned space at a receiving terminal.

The sale marks the latest move by China, one of the world’s top gas importers, to liberalize natural gas prices, open up access to oil and gas infrastructure and shore up supplies as the peak winter demand season approaches.

Other state-owned companies such as PetroChina have leased terminals to third-party users before in private deals. The auction from CNOOC, however, gave third-party players equal opportunity to bid for access.

“This is the first time that LNG terminal leasing rights were put up for auction,” Zhenhua Oil said in the statement, adding that Zhenhua is looking to meet rising gas demand from China as it expands into LNG trading.

The deal comes just months after Zhenhua set up a business to invest in LNG terminals and trade the fuel.

Zhenhua Oil plans to import 100 million cubic meters of LNG to Yuedong in between Oct. 24 and 26, it said.

The company will pick up its cargo from the terminal by trucks, Zhenhua said.

Reporting by Meng Meng and Aizhu Chen; Editing by Christian Schmollinger