Petronas to Supply Vitol with LNG from 2024

Malaysian state producer Petronas is to sell LNG to Swiss trading house Vitol from 2024, in volumes of up to 0.8mn metric tons/year for 15 years, on both a delivered ex-ship (DES) and free on board (FOB) basis, it said November 29.

The primary supply to Vitol will come from the 14mn mt/yr LNG Canada plant, of which Petronas owns 25%, and which is expected to be operational in 2024. Canada is Petronas' second largest resource holder after Malaysia, with vast unconventional oil and gas resources in North Montney, it said.

Petronas' vice president of LNG marketing and trading, Ahmad Adly Alias, said: "With a strong global supply portfolio, Petronas is able to provide flexible solutions within a changing and evolving LNG market. Petronas is pleased to sign this long-term LNG supply deal with Vitol and hope that it will continue to enhance the long history of business collaboration with the Vitol Group."

Vitol's head of LNG, Pablo Galante Escobar, said: "This supply deal with Petronas will further strengthen our ability to offer reliable and flexible LNG solutions to customers worldwide."

The decision to commit to LNG Canada was not taken after all the output had been sold in principle, which is the more usual way to finance LNG projects with their huge up-front costs and long pay-back times; instead the partners are using their balance sheets. However, they may decide to approach banks to refinance the deal on the strength of LNG sales and purchase agreements that they sign in future.