CNOOC buys carbon neutral LNG cargoes from Shell

Chinese state-controlled importer CNOOC has signed a deal to receive two "carbon neutral" LNG cargoes from Shell for delivery to China, marking the country's first such LNG receipts.

CNOOC intends to auction these cargoes on the Shanghai petroleum and natural gas exchange (SHPGX) to provide downstream gas users with the opportunity of decarbonising their use of LNG. But no dates for the auction were disclosed. SHPGX will supervise the transaction, performance guarantee and settlement arrangements.

Carbon credits from a variety of nature-based projects including Shell-supported afforestation projects in China's Qinghai and Xinjiang provinces will fully offset carbon dioxide (CO2) emissions from producing the gas up to the final consumption of the two cargoes, Shell said. The cargoes will provide enough carbon neutral energy to power nearly 300,000 homes for a full year.

The firms did not reveal the size of the cargoes, although Shell said an average LNG cargo of around 70,000t emits around 240,000t of CO2 emissions across the value chain.

CNOOC has supply agreements with Shell totalling around 8.6mn t/yr of LNG, of which some is supplied from the 8.5mn t/yr Shell-operated Queensland Curtis LNG (QCLNG) in Australia. It also has a 50pc stake in train one of QCLNG.

The firm has worked with SHPGX since 2018 to offer slots at its LNG regasification terminals to Chinese energy firms with no access to LNG import and regasification facilities. The offer of slots on the SHPGX were a response to Beijing's push to open up China's gas market and attract more investors without state-controlled links.

Shell has previously supplied carbon neutral LNG cargoes to other northeast Asian consumers. It supplied Taiwan's state-owned CPC with a cargo in March. It supplied in June last year one cargo each to Japanese utility Tokyo Gas and South Korea's GS Energy. The firms received these cargoes by July last year.

By Camille Klass