HOUSTON (Reuters) – Royal Dutch Shell Plc has won a long-term contract to provide liquefied natural gas to a Chinese company’s 441 megawatt power plant under construction in Colon, Panama, advisors on the deal said.
The $900 million power project, being built by Sinolam LNG affiliate Sinolam Smarter Energy LNG Power Co, expects to begin taking deliveries of the super-cooled natural gas in 2020, the advisors told Reuters late Wednesday.
The deal with a Shell trading unit comes as a trade dispute between the United States and China has put global LNG exports in the spotlight. This week, China imposed tariffs on $60 billion of U.S. goods, including a 10 percent tax on LNG imports effective Monday, in response to the U.S. slapping tariffs on some $200 billion of Chinese goods.
Terms of the 15-year deal, which will meet all the fuel needs of the LNG-fueled plant, were not disclosed. The facility will require roughly 400,000 tonnes per year of LNG.
Sinolam LNG, a Panamanian subsidiary of private Chinese investment firm Shanghai Gorgeous, also is building an LNG receiving facility in Colon that will utilize a floating storage unit berth.
Energy consultants Featherwood Capital acted as commercial advisers for Sinolam, and Hogan Lovells were legal advisers.
Shell declined to comment on the deal.
In the 12 months to June, China was the second largest buyer of U.S. LNG, while Shell was the largest U.S. LNG seller, according to research published by energy consultancy Wood Mackenzie on Wednesday.
After years of slumping prices, in which oil and gas companies slashed costs and project investments, the energy industry is coming out of crisis.
At the Gastech trade show this week in Barcelona, delegates said the outlook for the natural gas business was better than at any point since 2014. Global LNG trading is expected to double in coming years, from 300 million tonnes this year.
This upturn is largely due to soaring demand for natural gas in China, where there is a government push to move millions of households and factories from using coal to employing cleaner-burning gas, and because countries from Myanmar to the Philippines may soon start importing LNG.
Reporting by Liz Hampton; Editing by Chizu Nomiyama and Marguerita Choy