China's Sinopec is in discussions with Pembina Pipeline Corp. for a liquefied natural gas (LNG) offtake agreement and equity stake in the Canadian company's proposed Cedar LNG project, two sources with knowledge of the matter told Reuters, Report informs.
A joint venture between Haisla First Nation and Pembina, Cedar would be one of Canada's first LNG export terminals, costing roughly $4 billion. Cedar would produce 3 million metric tons of LNG per annum (MTPA) after completion in 2028, pending a final investment decision by mid-2024.
Together with the larger Shell-led LNG Canada, which is under construction, the terminals would provide access for Canadian gas to Asian markets, reducing reliance on US sales.
Sinopec is in talks to purchase 1.5 million tons annually of Cedar LNG production under an offtake owned by Pembina, two of the sources said, declining to be named as the talks are not public.
The world's largest refiner by capacity, Sinopec has slowed its global investment in upstream oil and gas in the decade since the 2014/15 oil price rout and as Beijing increased its scrutiny of national oil companies' finances.
With slowing oil demand growth but increasing gas use in China, Sinopec is looking to expand its global portfolio by investing in refining and petrochemical projects in Sri Lanka and Saudi Arabia and gas projects in Qatar and Canada.