Canada's CF Energy, Cnooc Sign Gas Agreement
Canada-listed but China-focused gas distributor CF Energy has signed a gas purchase deal with state-owned Cnooc, it said June 14.
As per the deal, CF Energy’s wholly owned subsidiary, Sanya Changfeng Offshore Natural Gas Distribution, will buy gas from Cnooc’s Eastern 13-2 offshore field. Sanya Changfeng distributes piped natural gas in the city of Sanya in Hainan province.
The contract stipulates a price of yuan 1.88/m3 ($0.27/m3) for the natural gas supplied from June 17, 2019 to December 31, 2019 and yuan 1.93/m3 for the year 2020. The quota of natural gas allotted to the company is 22.74mn m3 and 49mn m3 respectively for the period from June 17, 2019 to December 31, 2019 and the year 2020, CF Energy said.
Until now, the company was mainly sourcing gas from the gas fields in South China Sea and LNG supplemental gas source. In recent years, the supply volume of pipeline natural gas from gas field has decreased due to the decayed capacity in Yacheng 13-1 gas field of Cnooc, it said.
“City natural gas operators used LNG as a supplemental gas source for sales. The use of more expensive LNG as a supplemental gas source was a significant factor in the recent drop in gross profit margin of CF Energy’s Sanya gas distribution operation. Going forward, with the new gas source available, the company expects its overall gross profit margin to improve and normalise at previous levels,” the company said.
The purchase contract CF Energy entered with Cnooc is a product generated on the Shanghai Petroleum and Natural Gas Trading Center.