US-China LNG deal unlikely to smooth over trade issues ahead of talks between Joe Biden and Xi Jinping

Sinopec, China’s state-owned oil giant, signed a contract with the US Venture Global LNG to buy 4 million tonnes of LNG annually for 20 years

The deal is as a positive step for US-China relations under the phase one deal, but does not address long-term disagreements, analysts say

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A liquified natural gas (LNG) tanker leaves the dock after discharge at PetroChina’s receiving terminal in Dalian, Liaoning province. Photo: Reuters

Published: 12:00am, 6 Nov 2021Updated: 12:57am, 6 Nov 2021

The signing of the largest ever liquified natural gas (LNG) long-term contract between Chinese and US companies could create goodwill ahead of a virtual summit between US President Joe Biden and China’s leader Xi Jinping, but it is unlikely to smooth over long-standing disagreements concerning the phase one deal, analysts say.

Sinopec, China’s state-owned oil giant, signed a contract with the US Venture Global LNG to buy 4 million tonnes of LNG annually for 20 years at a ceremony in Shanghai on Thursday, according to a statement from the company on its official WeChat channel.

“This is by far the largest LNG long-term agreement signed by China and the US,” state-owned Xinhua News Agency said on Thursday.

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In a separate deal, Sinopec’s subsidiary Unipec agreed to buy 3.8 million tonnes of LNG from the American company, the statement said.

Details of the Sinopec-Venture Global agreement were revealed last month in documents on the US Department of Energy website, but the official signing ceremony was held at the annual China International Import Export in Shanghai this week.

China’s purchase of American energy products is an important part of the phase one trade deal with Washington, which is set to expire on December 31.

Although the new deal is small in relation to China’s overall LNG imports of 67.1 million tonnes last year, the agreement will be viewed as a positive step for US-China relations ahead of a virtual meeting later this year between Biden and Xi, analysts say.