China’s Beijing Gas Group is negotiating with Shell to sign a liquefied natural gas (LNG) supply and purchase deal in the second quarter of 2022, reported Reuters, citing a source with direct knowledge of the matter.

Municipal government-backed Beijing Gas, which started talks last month, is seeking 1.5 million tonnes of the super-chilled fuel a year, from Shell.

The potential ten-year deal could mark the first long-term LNG contract for the state-owned piped gas distributor. If the talks are successful, the agreement would be effective from 2023.

The news agency cited the source as saying: “A deal is expected in the second quarter, at the latest.”

Shell plans to supply LNG into a new $3.16bn (CNY20bn) terminal in Tianjin. The terminal, with a capacity of five million tonnes a year, is planned to be commissioned at the end of 2022.

To be connected to Beijing via a 300km pipeline, the terminal is intended to provide emergency supplies and storage for the region.

Beijing Gas is also in talks with undisclosed US exporters for similar long-term supplies.

In the recent months, several Chinese companies have signed LNG supply deals for more than ten million tonnes of annual LNG supply, from the US.

Shell was one of the three suppliers shortlisted by Beijing Gas in 2021. Other firms were Qatar Petroleum and China’s CNOOC.

Last month, Shell renewed talks with the UK’s offshore regulators over the Jackdaw gas field development, in the North Sea.

The company had earlier planned to extract and burn the unwanted CO₂ from the gas on the Shearwater platform. The resulting treated gas was to be transported onshore, via a new pipeline.

Despite this, the plan was later rejected by the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED).