US-based Cheniere Energy, through its subsidiary, Cheniere Marketing, has signed an agreement to supply LNG to Chinese state-owned firm Sinochem Group.

Under the 17.5-year binding sale and purchase agreement (SPA), Sinochem Group will initially receive approximately 0.9 million tonnes per annum (mtpa), starting from July 2022.

The LNG volume, which will be supplied to Sinochem on a free-on-board basis, will be eventually increased to 1.8mtpa.

In a press statement, Sinochem said: “The purchase of LNG is an important initiative for Sinochem Group, in accordance with the 14th five-year-plan, to ensure safe supply of energy, to pursue transformation and upgrading of the energy industry, and to advance green innovation and development, with a view of working towards the ‘dual carbon’ goal.”

Cheniere said that the LNG purchase price under the SPA is indexed to the Henry Hub price, plus a fixed liquefaction fee.

Cheniere president and CEO Jack Fusco said: “We are pleased to announce this long-term LNG contract with Sinochem Group, one of China’s leading state-owned energy companies, and to further Cheniere’s role in providing clean, affordable and reliable energy to the Chinese market for many years to come.

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“In addition, the SPA further reinforces our commercial momentum, and once again confirms the strength of the global LNG market and the global call for investment in additional LNG capacity, including our Corpus Christi Stage 3 project.”

The fully permitted Corpus Christi Stage 3 project will have a total nominal production capacity of more than 10mtpa. It will include up to seven midscale liquefaction trains.

Last month, Cheniere Marketing agreed to supply approximately 0.9 Mtpa of LNG on a free-on-board basis to ENN LNG (Singapore), a unit of China’s natural gas distribution company ENN Natural Gas.

Effective July 2022, the deal has a term of approximately 13 years.