Trading house Vitol has signed a multi-year LNG purchase agreement with Russian Gazprom Marketing & Trading for the annual supply of around 300,000 metric tons of LNG, from 2018.
The supply will come from GM&T’s diversified LNG portfolio, and was sold by Gazprom’s Singapore subsidiary, Vitol said April 20. No details of the contract terms or its duration were provided but they are likely to include delivery ex-ship as more cargoes are sold on the open water.
Gazprom has one LNG plant in operation, at Sakhalin, the capacity of which might be expanded. Gazprom’s other plans to build LNG export capacity, including at Vladivostok, also on Russia’s Pacific coast, have not been realised.
Vitol’s head of LNG Pablo Galante Escobar said: “We are delighted to be working with Gazprom Marketing & Trading, a subsidiary of Gazprom, the world’s largest producer of natural gas. Vitol is an established participant in LNG markets globally and this development will strengthen our offering to customers world-wide.”
Escobar told the IP Week conference in February that LNG was in “structural oversupply,” and he could imagine some US production, sold on tolling agreements, being shut in from time to time, as new gas in the eastern Mediterranean, such as the Zohr field off Egypt, sought a market. In Europe, “pipelines have taken market share from LNG,” he said. Asia also has limited capacity to absorb LNG: there is nominal spare regasification capacity in China, he said; and in India, the Kochi terminal is working at only a tenth of capacity as there are not the pipelines to take the gas away.