BRISBANE, Australia, April 21 (UPI) -- Australia Pacific LNG signed a binding agreement to supply Chinese state-owned oil giant Sinopec with 4.3 million tons of liquefied natural gas a year for 20 years, the company said Thursday.
The deal, worth an estimated $90 billion, represents Australia's single biggest LNG sales and purchase agreement by annual volume.
APLNG is a joint venture of Origin Energy and U.S. company ConocoPhillips. Sinopec also agreed to spend $1.5 billion for a 15 percent stake in the venture in Queensland state, reducing Origin's and ConocoPhillips' stakes to 42.5 percent each from 50 percent currently.
"Deals like this one put Australia on track to be one of the world's largest suppliers of LNG in coming years," Australia's Minister for Resources and Energy Martin Ferguson said in a statement.
Ferguson said Queensland's sanctioned and proposed coal seam gas-to-LNG projects have the potential to generate more than $50 billion in investment, hundreds of billions in exports and thousands of jobs in the state.
Increasing Australia's supply of LNG to China -- the world's top emitter of greenhouse gases -- would help to reduce emissions and help ensure rising energy demands are met with cleaner fuel sources, Ferguson said.
China has three LNG receiving terminals in operation, with a number of new facilities planned or under construction, including Sinopec's planned operation in Shantou City for 5 million metric tons.
The deal "will help Sinopec diversify its natural gas supply, secure domestic energy supply and meet the rapidly increasing demand of customers in China," said Zhang Yaocang, vice president of Sinopec Group and vice chairman of Sinopec Corp., in a statement. He said Sinopec would continue looking for more cooperation opportunities in Australia.
Ferguson, in a speech to the Australian Petroleum Production and Exploration Association's annual conference April 11, said "we are entering the LNG age," noting that Japan's earthquake and tsunami was likely to lead to increased demand for LNG and that Australia was well-placed to meet the higher demand.
China is Australia's second-largest customer for LNG after Japan. The deal brings new and existing LNG contracts with China to more than 15 million tons annually, Ferguson said.
The 2010 World Energy Outlook forecasts that China's demand for gas could increase by 5.9 percent annually between 2008 and 2035. This growth would take China from 2.7 percent of global gas consumption in 2008 to 8.7 percent by 2035.