ExxonMobil (XOM) Signs LNG Supply Agreement With China Firm
Zacks Investment Research | Apr 23, 2019 06:36AM ET
ExxonMobil Corporation (NYSE:XOM) has inked a sales and purchase agreement with Zhejiang Provincial Energy Group relating to supply of the fuel. The move reflects on the company’s attempt to boost marketing of liquefied natural gas (LNG) in China.
Per the terms, ExxonMobil will supply 1 million tons of the super-chilled fuel a year to the provincial government-backed Zhejiang Energy. The agreement will be effective from early 2020. The agreement follows a framework deal announced in October 2018. The company did not disclose details on price, timing or source of the supplies.
ExxonMobil is focusing on the expansion of its LNG portfolio. Some of its upcoming projects are based in Mozambique, Papua New Guinea, Qatar and Golden Pass in the United States.
A 9-billion yuan ($1.34 billion) receiving terminal for the fuel is being built by Zhejiang Energy in Wenzhou, located in the eastern province of Zhejiang. It is expected to have an annual handling capacity of 3 million tons. The other partner in the terminal is the state oil and gas major — Sinopec (NYSE:SNP) .
Per Beijing-based consultancy SIA Energy, the ExxonMobil-Zhejiang deal is separate from the United States-China trade negotiations, under which China firms are anticipated to eventually boost purchases of U.S. gas.
The company already has two long-term LNG supply agreements with Sinopec and CNPC —the largest state oil group in China.
The agreement indicates ExxonMobil’s commitment to cater to natural gas demand in the country. The company’s presence in China’s energy industry dates back to the late 1970s. With a long-term commitment in the country, the company expects to help meet China’s energy needs through its products, technologies, partnerships and investments.
Zacks Rank & Key Picks
Currently, ExxonMobil carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy space are Antero Resources Corporation (NYSE:AR) and CrossAmerica Partners L.P. (NYSE:CAPL) , each sporting a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
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