[KUALA LUMPUR] Malaysia's state oil firm Petronas has signed a 10-year liquefied natural gas (LNG) supply agreement with a subsidiary of China's offshore oil and gas major CNOOC valued at about US$7 billion, the firm said on Wednesday.
Petronas, or Petroliam Nasional Berhad, said the deal with CNOOC Gas and Power Trading & Marketing Limited is for 2.2 million tonnes per annum over a 10-year period.
"This long-term supply agreement also includes supply from LNG Canada when the facility commences its operations by the middle of the decade," Petronas said in a statement.
The deal is indexed to a combination of the Brent and Alberta Energy Company (AECO) indices, it said.
AECO is a Canadian natural gas price benchmark, similar to the Henry Hub index in the United States, but is not typically used as a pricing basis for LNG spot contracts.
In Asia, the S&P Global Platts' Japan-Korea-Marker (JKM) has been increasingly used as a pricing basis in spot contracts.
Petronas signed its first LNG cargo using the AECO index to a buyer in the Far East in May.
The deal with CNOOC reflects the markets' receptiveness and recognition of AECO indexed LNG into the world's largest LNG market, said Shamsairi M Ibrahim, Petronas Vice President of LNG Marketing & Trading.