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.

The deal is for 2.2 million tonnes per annum (MTPA) for a 10-year period, indexed to a combination of the Brent and Alberta Energy Company (AECO) indices.

The term deal between Petronas and CNOOC is valued at approximately US$7 billion (RM29 billion) over 10 years, it said in a statement here, today.

“Petronas is proud to strengthen our decade-long relationship with CNOOC through this term LNG supply. Importantly, it reflects the markets’ receptiveness and recognition of AECO indexed LNG into the world’s largest LNG market; as we seek to grow the use of LNG as a cleaner and cost effective form of energy,” said Petronas vice-president of LNG Marketing & Trading, Shamsairi M. Ibrahim.

The AECO index is the leading price marker for natural gas in Canada similar to the United States’ Henry Hub, which is the benchmark for natural gas prices used as an indexation to LNG prices.

Petronas introduced the AECO index to its customers in May this year following the sale of a spot cargo from Bintulu, Malaysia, to a buyer in the Far East.

The agreement with CNOOC, China’s largest LNG importer, reflects Petronas’ commitment to ensuring security of supply through an established transparent and stable price index such as AECO in the LNG market, while providing additional pricing options for its customers.

Once ready for operations, the LNG Canada project paves the way for Petronas to supply low greenhouse gas emission LNG to the key demand markets in Asia.