Origin Energy of Australia said Tuesday it has signed a non-binding heads of agreement with a unit of China’s privately-owned ENN Energy for the supply of 500,000 tonnes of LNG per year for a period of five years.
A binding LNG SPA, which includes an option to extend the supply period by an additional five years, is expected to be executed during the second half of 2016, Origin said in a statement.
Deliveries of LNG under the deal would be expected to begin in 2018 or 2019 after completion of ENN’s Zhoushan receiving terminal in Zhejiang province, China.
Origin holds a 37.5 percent stake in the APLNG joint venture and is the upstream operator of the LNG export project.
Under the heads of agreement, Origin has the flexibility to supply ENN from its portfolio interests, optimised with third party purchases where market conditions create an opportunity to lower overall cost of supply.
As LNG and commodity markets strengthen in the future, Origin together with its partners, has the option to “bring forward the development of its resource positions on Australia’s east coast,” Origin said in the statement.
“For example, the Ironbark resource is an economic source of supply for ENN when tolled through existing LNG infrastructure and can be developed at a time when it becomes the lowest cost source of supply,” Origin added.
LNG World News Staff